Article

TAM, SAM and SOM: How to Calculate the Size of Your Market

Akshat Agarwal · Antler Free Beginner

Written from an early-stage investor's chair, this walks the calculation with examples and is blunt that a bottom-up build beats a share-of-TAM guess. Antler backs pre-seed founders, so the advice is calibrated to exactly the stage you are at. Useful for seeing how a fund wants the number presented.

  • Early-stage investors prefer a bottom-up build over a share of TAM
  • Worked examples show each of the three numbers being derived
  • Present the assumptions so the number can be stress-tested
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It answers 3 questions

  1. What are TAM, SAM, and SOM and how do I actually calculate them?
  2. Investors keep asking for a top-down TAM slide, but I built my number bottoms-up. Which do I show?
  3. Two of us disagree on how big the opportunity is. How do we resolve a market-size argument between cofounders?

Read with it

  1. The single best thing ever written on customer conversations. It teaches you to ask about the customer's life and past... momtestbook.com Book · ~130 pages The Mom Test Rob Fitzpatrick
  2. Before you sweat which side to seed, Gurley helps you judge whether your marketplace is even structurally worth building. He... Above the Crowd Essay · 20 min read All Markets Are Not Created Equal: 10 Factors to Consider When Evaluating Digital Marketplaces Bill Gurley
  3. Most market sizing advice online is generic TAM SAM SOM filler. This one is written by an investor, backed by a survey of 30... Pear VC Essay · ~15 min read Market Sizing Guide Ian Taylor
  4. This is Indian investors and operators talking, at length, about which global trends actually translate to India and which... Prime Venture Partners Podcast Prime Venture Partners Podcast Prime Venture Partners
  5. Video · ~50 min How to Evaluate Startup Ideas Kevin Hale, Y Combinator
  6. This one focuses squarely on the method your short answer champions, building TAM up from real customer counts and pricing... Qubit Capital Article Bottom-Up Market Sizing for Startups Qubit Capital
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