Every founder claims they're going after a massive market. Your job is to figure out if that's actually true—and more importantly, whether this specific company can capture a meaningful share of it. Sloppy market sizing is one of the fastest ways to lose credibility at IC.
Start with a large, well-defined market and narrow it down. This is the approach most founders use in their decks (often poorly).
Example: "The global HR software market is $30B. Mid-market companies represent 20%. Our specific category (performance management) is 15% of HR spend. TAM = $30B × 20% × 15% = $900M."
When to use: Quick sanity checks, existing categories with good research data.
Watch out for: Overly broad starting points that inflate the number. If you're starting with "the global cloud market," you've gone too wide.
Count the actual customers and multiply by realistic spend. This is the approach partners trust most because it's grounded in specifics.
Example: "There are 15,000 mid-market companies in the UK with 200-2000 employees. Our target buyer (HR director) has budget authority for tools costing £20-50K/year. At 30% adoption ceiling, the UK SAM = 15,000 × 30% × £35K = £157M."
When to use: Always. Even if you also do top-down, include a bottom-up calculation as a cross-check.
Estimate the value created or cost saved, then calculate what portion the startup could capture. Useful for new categories where no market data exists.
Example: "Manual compliance processes cost mid-market financial firms an average of £500K/year. This tool reduces that by 60%. If they capture 20% of the value created, that's £60K per customer. With 8,000 target firms, the market is £480M."
Partners care most about SAM (Serviceable Addressable Market)—the portion you can realistically go after with today's product and go-to-market. TAM is the dream. SAM is the plan. SOM (Serviceable Obtainable Market) is what's achievable in 3-5 years.
Here's the question that matters: can this company get big enough to return the fund? Work backwards:
If the math doesn't work, the market might be too small—regardless of how impressive the founding team is.
Don't rely on a single data source. Cross-reference analyst reports with bottom-up calculations. Check public company comparables. Use Predict Ventures to benchmark against historical exit data—if similar companies in this market haven't produced meaningful exits, that's a red flag worth investigating.
In your memo, always include:
The best associates don't just size markets—they form a view on whether the market dynamics favour venture-scale outcomes.
Stop relying on gut feel. Predict Ventures benchmarks every startup against 15,000+ data points and 50 years of exit history to give you a quantitative edge.
.svg.svg)