Readers speak up

I'm going to start printing reader submissions.  Here's one from Jen and Peter, of Library House, a consulting outfit in Cambridge UK.


" We think they tried to say something simple, but ended up saying very little.

What is the message of that chart?

Investment went up and down, number of deals has varied, what about the average disclosed deal size? What is it they try to get across?

 

We would have drawn this chart differently, probably like the picture attached [Ed: see below]. Our guess would be that the key message in this chart was about trends. Well the key conclusion is that the total number of VC investments in China has remained relatively stable over the last five years, but that a dramatic increase in deal size [Ed: my italics] has increased the total amount of money deployed quite significantly. Alternatively, one might conclude that a lot of money looking for a new home has increased the deal size... "


It appears that they have indexed each variable to 100 = 2001, and hence all three vertical scales are percentages.  This is a rare instance where superimposing the first two lines on the same chart would prove insightful (the third line is a derivative of the other two).  Indexing harmonizes  the scales therefore the superimposed chart works with only one vertical axis.

Comments

[dfpoon]

Wouldn't it be better if we use Deal-Amount scatter plot instead? Year labels will be conise enough to show the trend.

BTW, I am a regular reader of the site. I found this your post very inspiring. Keep up the good work.

[Kaiser]

It depends on what relationship you're trying to explore. If the relationship between number of deals and deal size is desired, then a scatter plot would work well. In this case, they seem more interested in understanding the trend and the period-to-period changes.

Thanks for reading!