Total Addressable Market

The total addressable market is the size of the market that represents the total potential revenue for a product.  

This is the market that could ever buy the startup’s product.

In the startup world, there’s truly no limit to how big a company can grow.

Investors look for business opportunities with large upside potential.

Startups focus on large markets as it provides the most potential and the best chances for success.

Large markets provide many opportunities for entering the market and positioning within the market relative to competitors.

The larger the market the better chance of the startup finding product/market fit.

Within the total addressable market, there is the serviceable market which is the size of the market you can reach.

This does not mean the startup must actually reach the full market to be successful but rather it shows the opportunity.

Within the serviceable market, there is the beachhead market which is the first set of customers to pursue.

This gives the startup an area to focus on in entering the market.

The total addressable market is a mental model startups and investors use to assess business opportunities.

In raising funding, it’s important to know the size of the market and the segments before pursuing it.

 

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.