Ever wondered how to size up a market opportunity for your next big investment?

Let's break it down:

  • TAM (Total Addressable Market): Imagine the entire ocean - that's your TAM. It's the broadest possible market for your product or service, if everyone who could ever use it did.
  • SAM (Serviceable Addressable Market): Now, imagine a specific fishing zone within that ocean - that's your SAM. It's the part of the TAM that you can realistically reach with your resources and capabilities.
  • SOM (Serviceable Obtainable Market): Finally, picture the fish you actually catch in your nets - that's your SOM. It's the achievable market share you can capture within your SAM over a specific period.

Why it matters for VCs:

  • Focuses your efforts: TAM helps you identify large markets, while SAM and SOM help you hone in on the sweet spot where you can make a real impact.
  • Reduces risk: By understanding the realistic market size, you can avoid overextending yourself and make sure your investments have a clear path to profitability.
  • Improves decision-making: Data-driven insights from TAM, SAM, and SOM can help you choose the most promising startups with the biggest potential for growth.

Bonus tip: Remember, TAM, SAM, and SOM are estimates, not guarantees. Always do your own research and due diligence before making any investment decisions.

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