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Start-up companies financed by venture capitalist have a

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Start-up companies financed by venture capitalist have a [#permalink] New post 10 Aug 2006, 17:40
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Official Guide for GMAT Verbal Review, 2nd Edition
Practice Question
Question No.: 20
Page: 122
Difficulty:

Start-up companies financed by venture capitalist have a much lower failure rate than companies financed by other means. Source of financing, therefore, must be a more important causative factor in the success of a start-up company than are such factors as the personal characteristics of the entrepreneur, the quality of strategic planning, or the management structure of the company.

Which of the following, if true, most seriously weakens the argument above?

(A) Venture capitalists tend to be more responsive than other sources of financing to changes in a start-up company’s financial needs.
(B) The strategic planning of a start-up company is a less important factor in the long-term success of the company than are the personal characteristics of the entrepreneur.
(C) More than half of all new companies fall within five years.
(D) The management structures of start-up companies are generally less formal than the management structures of ongoing businesses.
(E) Venture capitalists base their decisions to fund start-up companies on such factors as the characteristics of the entrepreneur and quality of strategic planning of the company.
please explain the reasoning.
[Reveal] Spoiler: OA

Last edited by dentobizz on 21 Oct 2013, 21:29, edited 2 times in total.
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 [#permalink] New post 10 Aug 2006, 18:02
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(E) it must be. the characteristics that VCs consider important have been indicated as not important in the statement.
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 [#permalink] New post 10 Aug 2006, 18:34
why not 'A'
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 [#permalink] New post 10 Aug 2006, 20:41
Clear E.

It stresses that even venture capitalists look for the same qualities that have been rejected by the author.

Why not A

A strengthens the argument.
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 [#permalink] New post 10 Aug 2006, 21:53
Straight E.
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 [#permalink] New post 11 Aug 2006, 06:14
Straight (E), fundamental venture capital investment logic.

2:02

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Re: Start-up companies financed by venture capitalist have a [#permalink] New post 06 Oct 2013, 13:48
bumping up for review and further discussion
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Re: Start-up companies financed by venture capitalist have a [#permalink] New post 02 Jan 2015, 09:46
Hello from the GMAT Club VerbalBot!

Thanks to another GMAT Club member, I have just discovered this valuable topic, yet it had no discussion for over a year. I am now bumping it up - doing my job. I think you may find it valuable (esp those replies with Kudos).

Want to see all other topics I dig out? Follow me (click follow button on profile). You will receive a summary of all topics I bump in your profile area as well as via email.
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Start-up companies financed by venture capitalist have a [#permalink] New post 04 Jul 2015, 21:13
Look at the conclusion : Source of financing, therefore, must be a more important causative factor in the success of a start-up company .
This argument can be weakened only if the source of financing itself look at the factors as the personal characteristics of the entrepreneur, the quality of strategic planning, or the management structure of the company.

Option A talks only about the financial responsiveness .
Option E talks about the line of reasoning discussed above.Hence it is the right answer

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Manish Khare

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Re: Start-up companies financed by venture capitalist have a [#permalink] New post 05 Jul 2015, 23:25
What about option B ?'

On what basis can we eliminate it. Looking for a sound reasoning.
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Re: Start-up companies financed by venture capitalist have a [#permalink] New post 22 Jul 2015, 02:24
anewbeginning wrote:
What about option B ?'

On what basis can we eliminate it. Looking for a sound reasoning.


The conclusion says Source of financing (X) > Other factors(Y) - such as the personal characteristics of the entrepreneur(Y1), the quality of strategic planning(Y2), or the management structure of the company(Y3).

We need an option which somehow weakens the fact that X>Y. Option B states that the strategic planning of a start-up company(Y2) < the personal characteristics of the entrepreneur(Y1). How Y1, Y2 and Y3 contribute towards the success of the start-up company doesn't weaken the conclusion. Since there is no information given in this option regarding X, this option is irrelevant.

Hope it helps. :)
Re: Start-up companies financed by venture capitalist have a   [#permalink] 22 Jul 2015, 02:24
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