Thu, 31 March 2022
Sizing the Market
Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.
In diligencing the market, look for a market that is large and has strong growth potential.
If a new technology has spurred the growth of the market, then this may be a good time to invest.
Markets that are behind on the latest technology are ripe for growth.
The Total Available Market for venture-funded deals needs to be at least $1B in size.
This is referred to as the TAM, which is everyone who could ever buy your product.
The Service Available Market or SAM is the target market within your geographical area.
The Beachhead Market is the first 20 customers you are targeting.
The TAM and SAM are top-down numbers you find through research.
The Beachhead Market is a bottoms-up number you find through your sales and marketing efforts.
The presence of competition verifies the market. If there are no competitors, then there’s most likely not a market there.
The presence of acquirers is another key verifier of the market. If no one is buying companies in that market, then there’s no reason to build a business to be sold.
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Music courtesy of Bensound.