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- ♞ Common Problems: Market Slide
Today, we continue the 10-issue series in which I discuss the most common problems that I see on each slide in founders’ pitch decks. Today’s issue will look at the market slide.
What is the most common problem with the market slide?
The market slide is, for me personally, where I feel most founders lose me. Given that I help founders raise, I tend to be more generous than most when I hear problem/solution slide or when there is a missing perspective framer. I can often see where they are failing and how they can be improved.
However, the one slide that can immediately turn me off and has led me to turn down potential clients on many occasions is the market slide. The reason for this is that a poor market slide can truly make you lose credibility and seem like you have little idea of the scope or challenges involved in the business.
There is one specific problem that many founders make on the market slide that leads to these poor results, so let’s deep dive into that one problem…
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Using a top-down approach to the market slide is killing your deck. The moment I hear “All we need is a small piece of this $100B market”, I know this founder is not someone I want to waste my time with.
If you seriously believe that business is as easy as taking a small piece of a big market then you are not prepared to be a founder. This is exactly the type of phrase that scares investors away.
Instead, you NEED to take a bottom-up approach. You should talk about who the ideal customer is for your company. The one person who needs your product/service the most. Then explain how many of those people there are and how much you can make selling to each of those.
Price of sale x number of core customers = Serviceable Obtainable Market. You should capture these people in the short term (assuming no scaling issues).
Then we can look at people who are slightly outside that group, maybe the price point is too high, there are geographical limitations or some other smaller barrier. Once you add those people into our equation, you have your Serviceable Addressable Market.
Finally, you look at how many people your solution can help, and that is your Total Addressable Market.
But at each stage, you need to show investors how you will make the leap and overcome geographic barriers to sell to customers in your SAM but not your SOM? How will you get people in your TAM to buy when this isn’t an immediate need or when competing products exist?
Don’t just start by assuming you can capture a small part of a big market. Start by assuming you can capture your immediate market, then show investors how you can grow your market share.
Does your deck feature any of these common problems? |
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