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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]

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New post 10 Aug 2006, 18:40
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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, 22:29, edited 2 times in total.
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Start-up companies financed by venture capitalist have a [#permalink]

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New post 04 Jul 2015, 22:13
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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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New post 10 Aug 2006, 19:02
Quote:

(E) it must be. the characteristics that VCs consider important have been indicated as not important in the statement.
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New post 10 Aug 2006, 19:34
why not 'A'
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New post 10 Aug 2006, 21:41
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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New post 10 Aug 2006, 22:53
Straight E.
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New post 11 Aug 2006, 07:14
Straight (E), fundamental venture capital investment logic.

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*** Always start with E on "which of the following" CRs/PSs/DSs if pressed for time. Another Kaplandish strategy. Disclaimer: may not be effective with the PVue version of GMAT because kaplan simply reprints the same books each year with a different cover...
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New post 06 Oct 2013, 14:48
bumping up for review and further discussion
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Re: Start-up companies financed by venture capitalist have a [#permalink]

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New post 02 Jan 2015, 10:46
Hello from the GMAT Club VerbalBot!

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Re: Start-up companies financed by venture capitalist have a [#permalink]

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New post 06 Jul 2015, 00:25
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]

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New post 22 Jul 2015, 03:24
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. :)
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Re: Start-up companies financed by venture capitalist have a [#permalink]

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New post 14 Apr 2016, 10:49
Conclusion: Source of funding is more important than other factors in the success of start ups
Premise: VC financed start ups have a low failure rate than start ups financed by other means.

Flaw: Premise compares two different forms of financing for the success of start ups. Conclusion is about financing and other factors in the success of the start ups. Mind the gap please. There is no evidence to prove the conclusion.

Something which points out this gap i.e. other factors are as important if not more important than financing will weaken the argument.

Another way to look:
Negated Conclusion: Source of funding is less important that other factors in the success of start ups.
Answer choice with the premise should support the negated conclusion.
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New post 05 Aug 2016, 10:38
(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.

Author gives a flawed conclusion connecting Source of the fund to the success. But it's actually the decision of the Venture capitalists, whom to fund matters.
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Re: Start-up companies financed by venture capitalist have a [#permalink]

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New post 12 Aug 2016, 00:12
Keats wrote:
What about option B ?'

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



So the CR focuses on concluding that it is because of venture capitalist and not personal traits of the owner due to which start-ups succeed.

We need to find something which breaks this and focuses on the factor that personal traits matter and not just venture capitalist.

Option E achieves both saying that venture capitalist look for personal traits, hence we can say that personal traits matter most.
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Re: Start-up companies financed by venture capitalist have a [#permalink]

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New post 24 Sep 2016, 08:11
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.

Type - Weaken
Boil it down - Source of financing is more causative important factor than personal characteristics of the entrepreneur, the quality of strategic planning, or the management structure of the company. for Success of 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.
Out of scope as it does not talk about Financing source
(C) More than half of all new companies fall within five years. Irrelevant
(D) The management structures of start-up companies are generally less formal than the management structures of ongoing businesses. Irrelevant - management structures of ongoing business is beyond scope
(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. Correct answer - VC funding is not more important because VCs are funding start ups based on a few factors.

Answer E
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Re: Start-up companies financed by venture capitalist have a   [#permalink] 24 Sep 2016, 08:11
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