From $100k To $1M: Tyranny Of The TAM

You’ve got customers.

You’ve got some level of validation.

You’ve got, perhaps, a reasonable degree of product market fit.

Now should you charge to the VCs for funding?

Wait a minute. There’s a major issue that needs assessment first and foremost.

Market Size. 

What is TAM? Perhaps, the biggest factor in whether a VC funds you or not. TAM = Total Available Market.

Note: Top Down TAM doesn’t matter. You need to present a Bottom-Up TAM Analysis.

And to get funded, that TAM needs to be very large. Billion. Two billion. Ten billion.

Few businesses have that kind of TAM.

So most likely, you are going to be turned down because VCs don’t think you have a large enough TAM. 

Consider this.

There are many more $5 million, $10 million, $20 million business opportunities out there than billion dollar ones. Those don’t fit the VC model, but if you build a $10 million a year business that generates 30% profit year-over-year, what’s wrong with that picture?

Remember: Entrepreneurship = Customers + Revenues + Profits; Financing and Exit are Optional. 

Now, if you need help assessing your TAM, please feel free to learn the methodology here. You can also ask questions once you’ve done the curriculum, and I will answer.

Looking For Some Hands-On Advice?

I receive many emails from entrepreneurs who want to discuss their specific businesses. I’m very happy to discuss your situation during my free online 1M/1M Roundtables, held almost every Thursday. During each roundtable, up to five entrepreneurs can pitch their businesses and receive my immediate and straightforward feedback.

To give entrepreneurs all over the world access to Silicon Valley’s knowledge, methodology, and network, I founded the One Million by One Million (1M/1M) global virtual incubator. 1M/1M aims to nurture a million entrepreneurs to reach a million dollars each in annual revenue and beyond, thereby creating a trillion dollars in global GDP and ten million jobs.

For those still testing the waters of entrepreneurship, I’ve written my Entrepreneur Journeys book series to inform and inspire. My newest book, Billion Dollar Unicorns, is now available from Amazon.

If you are interested in entrepreneurship topics and my writings, you can follow me here. I hope to publish articles on LinkedIn every week.

Photo credit:  James Cridland/Flickr.com.