Seeking Clarity on TAM, SAM, SOM for Pre-Seed Pitch Decks
Hi everyone,
I’m currently working on my pre-seed pitch deck and am grappling with whether or not to include TAM, SAM, and SOM estimates. While I understand these are often considered essential in investor decks, I’d love to better understand their relevance, especially at this early stage.
Here are some specific questions I’m struggling with:
Why are TAM, SAM, and SOM numbers necessary for a pre-seed pitch?
Are investors primarily looking at these to gauge ambition, feasibility, or something else? Are there viable alternatives?
If these figures are difficult to estimate at such an early stage, are there other metrics or narratives that can work instead? How can I calculate and defend these numbers effectively?
What are realistic approaches to estimating these markets, especially in a domain that involves fragmented or emerging markets? How can I ensure these numbers hold up to scrutiny without overpromising? Any tips, resources, or anecdotes from your own experiences would be hugely helpful. I’d also love to hear from founders who opted not to include these numbers and how that played out.
Thanks in advance!
These numbers are just an estimate. VCs just want to know if this can be a big business (> 1Bn $). If it is less than 1 Bn it's hard to get funded by VCs as they can't fit this business into this model.
For calculation use the bottom up approach. Never directly cite research papers or news articles for these numbers.
Can you give me an example of how to back these numbers up?
Try to get hard numbers from any trusted sources. Ideally some kind of govt reported data. If not you can rely on few 3rd party reports to get the base numbers. Worst case scenario you can estimate using some logic.
It's good if you have it in deck just to represent its a big enough opportunity for them to invest.
It's generally a thing, if you don't have it everyone asks for it, if you have it noone looks at it.
I would say- you should know about the numbers, but it's not necessary to include in the pitch deck.
This should be part of conversation. And it's okay not knowing the TAM sometimes ie in case of Airbnb people always thought it is a niche idea. But turns out to be a business with huge TAM.