Aug. 31, 2023

Beyond TAM, SAM, and SOM: Captivating Investors with Your Market Story

Beyond TAM, SAM, and SOM: Captivating Investors with Your Market Story

This is part five of "The Ultimate Pitch Deck Guide for Startups," a fundraising guide made in partnership with DECKO, a leading pitch deck development company that’s helped ~180 startups raise over $100M from investors.


Your market slide is so much more than just a formality; it plays a key role in helping investors understand what their return on investment can look like in your company.

You started your company because you found a massive market opportunity with a clear problem to solve. Your Market slides are your opportunity to educate investors about the opportunity you saw when you first started your company.

A common investor pet peeve is when founders say something along the lines of “our market is so large that if we just captured 1% of the market, we would become a massive business.” 

Investors like to take big bets on overlooked industries, not small bets on saturated ones.

In this chapter of “The Ultimate Pitch Deck Guide for Startups,” we’ll dive into the best ways to convey your Market Opportunity to investors. We’ll show you that it’s about more than just your TAM, SAM, and SOM but rather an opportunity to hook and educate your investors on the way your customers think and just how big you can become.

Now, let’s dive in:

Market Timing

There was once a time when you 1) never got into a stranger’s car, and 2) never trusted anything you saw on the Internet. Today, you literally hail cabs from strangers on the internet through apps like Uber, Lyft, etc.

However, that didn't happen in a vacuum. The rise of smartphones, online verification, and the gig economy made it possible for ride-sharing platforms to become a safe, convenient, and ubiquitous standard for getting around town. Investors who understood that early became extremely wealthy from their ride-sharing investments, and the founders of those companies became even wealthier.

One commonly overlooked slide in pitch decks is the “Market Timing” slide in which you make a case for why now is the time for your company to exist.

Use this slide to showcase the tailwinds behind your business that line you up for success. 

Some common elements of Market Timing you can highlight in your deck are:

  • New and favorable regulation and/or government initiatives
  • The popularization of new technologies
  • Shifting consumer preferences
  • Intellectual property expiration from legacy players 

Each industry will have its own tailwinds, so find the ones that are unique to your industry.

Market Size: TAM, SAM, and SOM

In VC Vernacular, we discussed your Total Addressable Market, Serviceable Addressable Market, and Serviceable Obtainable Market. In this section, we’ll go into what those definitions mean and how to calculate them.

There are several different metrics that can be used to calculate market size, depending on the type of business you are running. A free social media app may look at the number of potential users it can acquire without considering how much money they spend. An online marketplace that generates revenue from transaction fees may look at how much money consumers in their industry spend. A SaaS (Software-as-a-Service) business that digitizes specific business services may look at the number of businesses that need their platform without considering whether they already spend on technology.

Your Total Addressable Market (TAM) is the total potential value your company could generate if it could capture 100% of the market for its product or service. It is a key metric to understand, as it can help set ambitious but realistic goals and allocate resources effectively.

There are two main ways to calculate TAM:

  • Top-down: This method starts with the overall size of the market and then narrows it down to the specific segment that your product or service targets. For example, if you are a software company that sells to businesses, you might start by calculating the total market for software in the United States. Then, you would need to narrow down that market to the specific segment of businesses that your software is designed for.
  • Bottom-up: This method starts with the number of potential customers for your product or service and then estimates the average revenue that each customer would generate. For example, if you are a SaaS company that sells to small businesses, you might start by estimating the number of small businesses in the United States. Then, you would need to estimate the average revenue that each small business would generate from your software.

Your Serviceable Addressable Market (SAM) is the portion of the Total Addressable Market (TAM) that your business can realistically capture.

There are two main ways to calculate SAM:

  • Top-down: This approach starts with the TAM and then narrows it down based on factors such as your target market, your product or service, and your competitive landscape.
  • Bottom-up: This approach starts with the number of potential customers in your target market and then estimates the average annual revenue per customer.

Your Serviceable Obtainable Market (SOM) represents the specific fraction of the SAM that your company can realistically win over, taking into account factors like marketing strategies, product differentiation, customer acquisition capabilities, and the competitive landscape.

Unlike the Total Addressable Market (TAM), which includes all potential customers, or the Serviceable Addressable Market (SAM), a subset of the TAM that accounts for the constraints and limitations a company faces in accessing and serving the entire market, the SOM goes a step further and considers not just the constraints but also your company's competitive positioning and ability to capture a portion of the SAM.

Market Characteristics

Even the largest and most overlooked markets can’t be won unless your business has an acute understanding of who your customers are and how they make decisions. This slide is your opportunity to show investors that you know your customers and how to excite them.

Begin by identifying what category of customers you are pursuing (e.g., Consumers, Enterprises, Governments, etc.). Share as much demographic information as possible, including location, age, ethnicity, organization size, and more.

From there, identify who your customer decision-makers are and how they make decisions. For example, a B2B platform for Customer Relationship Management likely needs to sway the Head of Sales or Chief Revenue Officer more than they need to sway the Chief Executive Officer or Chief Technology Officer.

However, some sales have multiple decision-makers. Clearly outline who each of the decision-makers are and what is important to them. 

For example, a Head of Sales may be interested in how that Customer Relationship Management software speeds up their sales cycle or increases their close rate, while a Chief Security Officer may consider how that platform protects confidential customer information from potential hacks.

Once investors understand who your customers are and how they make decisions, they can confidently assess your company’s likelihood of success with your target customer base.

BONUS: Expanding the Size of Your Market

The most exciting companies are those that not only conquer an existing market but also expand the size of their market through their presence. For example, people would rent vacation houses from other people before Airbnb. However, it wasn’t until Airbnb focused on trust, convenience, and an outstanding user experience that renting homes from others became a viable alternative to booking a hotel room.

Airbnb owned nearly all of the market growth that came with that and, at its peak, became worth more than Hilton, Marriott, and Hyatt combined.

Identify how you can expand the size of your market and include it in your pitch deck. 

Some common ways companies showcase their ability to expand the size of their markets are:

  • Democratizing access to resources, which brings in a customer base that previously could not afford a given product or service
  • Making a product or service more convenient, which brings in a customer base that did not have the time to access it before
  • Introducing a product or service to a geographic location or demographic group that existing solutions never focused on


After reading this chapter, you should have a clear understanding of how to convey your Market Opportunity effectively and excite investors along the way.

In the next chapter, we dive into your Solution slide to show investors that you not only understand your customer but have also built the product/service they can’t get enough of.