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  • Writer's pictureJasaro In

How to Size-up Your Market?

Updated: Dec 31, 2022

I present 2 expert opinions on sizing up the target market for your startup.

Gale Wilkinson, Co-founder, Vitalize VC

Bottoms-up Approach

Early-stage B2B startups, here's a quick how-to for sizing your market:

  1. Define your target market; this set of clients maps to who is likely to buy your current offering.

  2. Quantify, how many businesses are in this target?

  3. Multiple the no of target clients x your annual pricing.

To potentially invest in a startup, we look for this math to yield $1 B at a minimum. Ideally, even more than that, as the best VC-backable startups are going after very large markets - Gale Wilkinson

Q. How interested are you w.r.t SAM in this early stage evaluation step? Some markets are so big that the TAM is easy.

Gale: I want to understand GTM which gets at the way they define their first addressable market. However, for sizing, I care more about the long-term opportunities being considerably large.

A. And do you define this as your target market now (my startup is starting by dominating a specific vertical) or the whole thing (all the verticals we can enter in the next 3-5 years)?

Gale: I'd include any markets you plan to go after in the first 3-5 years.

Gokul Rajaram, @gokulr

I look for evidence of audacious thinking in seed memos/decks. Can this be massive?

  • I don't like it when the entrepreneur stops at $1 Bn GMV / 1M subs. Think bigger and longer term.

  • Craft a 10 year goal slide in your pitch deck.

  • Important note: it needs to be a bottoms-up build. Doesn't need to be super precise though.

  • This exercise forces entrepreneurs to push their thinking and stretch their horizons.

  • Some entrepreneurs are unable to make a bottoms-up build stretch that far, and the output is either unrealistic or not ambitious enough. In both cases, it's a pass for me.

(@alishagriffey) I get it that the “massive” pitch is seductive, but the problem with VCs always chasing this is that it inherently screens out founders who have a realistic view of growth, market size & execution risks…and instead funds founders with big egos and a sense of invincibility.

(@grinich) My hot take here is that it's actually deceptively challenging to conceptualize a huge market. Most people's direct experience is with products we individually use (iPhone apps, etc) and not looking at broader industry changes or huge category transformations. Thinking about huge market opportunities is counter intuitive, just like thinking about exponential growth is counter intuitive.

(@EugeneNg_VCap) It is not just about how big they can become. It's about what else and the optionality to expand to new verticals/horizontals. It has to be about how much bigger can they become.



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