adkikani wrote:
GMATNinja VeritasPrepKarishmaCan you please explain how (E) fits in to the bill here?
Conclusion: Causal
Cause - Effect
Source of financing (ie Finance by VCs) - > Determining success rate of start up.
How to weaken:
Alternate cause -> same effect
Alternate causes are : personal characteristics of entrepreneur, quality of strategic planning or management structure.
(E) says Same cause : Funding of VCs but influenced by alternate causes.
We are told that start-ups financed by VCs have a much lower failure rate. This might suggest that those companies have a lower failure rate BECAUSE they are financed by VCs. In other words, the source of financing might impact success.
Quote:
(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.
Choice (E) gives us some additional information. VCs base their funding decisions on factors such as 1) characteristics of the entrepreneur and 2) quality of strategic planning. This implies that the VCs are looking at those factors to try to determine which companies are
likely to succeed.
So those companies do NOT tend to succeed
because they are financed by VCs. Rather, the VCs tend to finance companies that already ARE likely to succeed. The source of funding does not CAUSE the success. The VCs are just good at looking at certain factors to determine which companies are likely to succeed. In other words, the VCs are good at betting on the right companies. But if those same companies had been financed by other sources, they should be just as likely to succeed.
I hope that helps!