Slides from a talk on Market Sizing and Competitive Analysis which I gave at Startup Next in Amsterdam, September 2014.

2. Market Sizing & Competitive Analysis
17th September 2014
Dwight Gunning - @dwightgunning

3. Market Sizing & Competitive Analysis
17th September 2014
Dwight Gunning - @dwightgunning

4. TOPICS
• Market Sizing
• Why is market sizing important?
• Sizing approaches
• Competitive Analysis
• Understanding the entire competitive landscape
• Evaluating competition and answering the right questions
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5. MARKET SIZING
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6. 6
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7. MARKET SIZING FOR YOUR INVESTORS
• Investors aim to help companies grow to $100M+ revenue in 3-5 years
• Some ballpark numbers:
• 1% of a $10B Market —> Is the market too broadly defined?
• 5% of a $2B Market —> This looks feasible / realistic.
• 50% of a $200M Market —> Is the market share too optimistic?
• Market Growth
• How is your specific segment going to grow over time?
• Market Value: gross vs net
• Do you sell your own product or take margin on somebody else's?
Present the sizing story you’re confident with and stand by it 100%
@dwightgunning

8. TOP DOWN ANALYSIS
• Total Available Market (TAM)
• Typically a top-line industry figure
• Serviceable Available Market (SAM)
• The market you can actually reach and
serve based on your customer
acquisition and sales channels
• This is the number VCs care about
• Serviceable Obtainable Market (SOM)
• The realistic market share you expect
to obtain.
Total Available Market
(TAM)
Serviceable
Available Market
(SAM)
Serviceable
Obtainable
Market
(SOM)
“Define your market sizing as tightly as you can.” - Mark Suster
@dwightgunning

9. BOTTOM UP ANALYSIS
• Use your own data:
• "Currently we have x clients who pay $y. There are N thousand
companies like this and so far we’re converting at B%.”
• Use representative data from your research:
• “Taxi driver’s monthly fare revenue is €5000. We’ll supply 20% of the
drivers work (€1000) for 10% commission (€100). There are 550,000
drivers in our launch cities. 10% market share => €66M market value.”
• Who’s the biggest company in the space right now?
Sanity Check: top down and bottom up sizing should “line up”
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11. COMPETITIVE
ANALYSIS
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12. "Explain your startup in the context of the
environment in which you operate including those
who you partner with, those who you compete against and
things that keep you up at night”
Stephanie Palmeri - Venture Capitalist
@dwightgunning

13. THE COMPETITIVE ENVIRONMENT
• It’s more than just competitors. Think about
• How else is the problem being solved?
• What are my suppliers and partners planning?
• Could my customers compete? (e.g. B2B / when part of a value-chain)
• Know the environment inside out:
• Macro business environment e.g. trade agreements
• Economic + political trends e.g. Data privacy and recent NSA events
• Cultural shifts e.g. Mobile, time-shifting
• Tech innovation e.g. 3D Printing, AR/VR, Wearables
• Regulation / Legislation e.g. online gambling, taxi and transport
A deep understanding will build confidence amongst investors
@dwightgunning

14. COMPETITOR ANALYSIS
• Competitors: Direct / Indirect / Future
• Points of differentiation
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16. Tweet me: @dwightgunning

17. Tweet me: @dwightgunning