There’s one issue I’m starting to see over and over again: startup founders, desperate to show how big their market is, go way over the mark, asking for numbers that aren’t available and absurd for TAM/SAM/SOM.
I get it: you want to look like you’re building a very valuable company. But in the pitch process, you still have to maintain a sense of honesty.
Be very careful that you are telling the right story when you try to dig into general reachable market, general serviceable market, and general attainable market.
The issue became particularly clear in the recent demolition of Vory’s pitch deck, but it seems unfair to call them out on their own. It’s a common issue in many pitch surfaces I see.
In Vori’s pit deck, the following slide appears:
That’s not your SOM. Image credit: Spring
On this slide, Vory talks about “the largest digitized segment of retail,” which may be correct, but the $785 billion in total spending in the U.S. is not the size of the market – it’s the size of all spending by consumers, in grocery stores. (Statista has some interesting numbers there.)
Investors are smarter than that.
The problem is, Vori isn’t launching a grocery store, but a tool. b Grocery stores. In other words, even if Vori’s business does its best and gains 100% market share in every independent supermarket in the world, that doesn’t mean the company will have $250 billion in revenue. The industry it serves It changes that amount of money.
Nowhere in the slide deck does the company say what it thinks is the top end of the sales volume in the industry. Whether that’s bottom-up (how much are indie supermarkets spending on inventory and analytics software, how much can that market grow, and how many of those stores are likely to be your customers?) or top-down (how can it be). There are many supermarkets, multiplied by the price of your service at each supermarket. This is your total market size.
I understand why Vory chose to use these numbers, but they are basically meaningless, mediocre at best, and misleading at worst. As a beginner, you want to be sure to paint a rosy, aggressive growth picture, but don’t be tempted to use the biggest numbers you can find. For example: If you are a car dealer, your total service market is not the price of the cars you sell (this is SOM for the car manufacturer). Your SOM sales commissions can include total pricing, service plans, aftermarket products and services, and more Really Earn money on. Don’t confuse the two!
This is taken from a full pitch deck teardown of the Vory deck. You can learn this and much more in my weekly pitch deck hack column on TechCrunch+!
