Investors need to believe the opportunity is big enough. Here's how to show them.
Every investor pitch includes a market size slide. Most of them are terrible. They either show a number so large it's meaningless ("the global healthcare market is £8 trillion") or so vague that nobody knows where it came from. Getting this right doesn't require a consultant or an expensive report. It requires clear thinking and honest maths.
Market sizing uses three layers, each smaller and more realistic than the last.
TAM (Total Addressable Market) is the entire market for what you're selling. If every possible customer bought your product, how much revenue would that be? This is the big, exciting number. It tells investors the ceiling exists.
SAM (Serviceable Addressable Market) is the portion of the TAM you could realistically reach with your current business model, pricing, and geography. You're not selling to every hospital in the world. You're selling to private clinics in the UK. That's your SAM.
SOM (Serviceable Obtainable Market) is what you can realistically capture in the next two to three years, given your resources, team, and competition. This is the number investors actually care about most, because it tells them what your near-term revenue potential looks like.
Top-down starts with a big industry number (from reports by Statista, IBISWorld, or Gartner) and narrows it down. "The UK accounting software market is £2.4 billion. We're targeting sole traders, which is roughly 15% of that market, giving us a SAM of £360 million." It's quick, but it's only as good as your assumptions. Investors will poke at every filter you apply.
Bottom-up starts with your actual customers and builds upward. "There are 120,000 dental practices in the UK. Our software costs £200 per month. If we can reach 5% in three years, that's 6,000 practices paying £2,400 per year, which is £14.4 million." This is harder to do but much more credible, because it's grounded in real numbers you can defend.
The best market size slides show both approaches and demonstrate that they roughly agree. If your top-down says £500 million and your bottom-up says £14 million, that's fine — they're measuring different things. But you need to be able to explain the relationship clearly.
Nobody expects a pre-seed founder to have perfect market data. What they want is evidence that you've thought about it seriously. A rough but logical bottom-up estimate beats a polished top-down number from a report you paid for. Show your working. Explain your assumptions. Be ready for the question "where did that number come from?"
Claiming a massive TAM with no logical path to any of it. Using "the market is £50 billion" as though that's your opportunity. Confusing the total industry size with your addressable market. Not showing your SAM or SOM at all. And the classic: saying "if we just get 1% of the market" without explaining why you'd get even that.
A pitch deck slide that shows TAM, SAM, and SOM as three concentric circles, with clear numbers and one sentence each explaining the logic. Below it, a simple bottom-up calculation showing how you arrived at the SOM. An investor should be able to understand your market size in under 30 seconds.
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Try the funding finder →This is general information, not financial or legal advice. Always do your own research and seek independent professional advice.