How to describe your market size to build credibility with your VC audience

Are you fishing in a big enough pond?

"Our goal is to capture just 1% of this $50B market. We'll be a $500M company." Investors have strong feelings about the TAM/SAM/SOM slide with a goal of capturing a small percent of a huge market. I've watched a few of them visibly deflate when it goes up, but they will never tell you why.

The usual advice — "Don't do that, VCs hate it" — misses what's actually going on. The problem isn't that the number is wrong. It's that you just used up one of maybe twelve slides you get to make a great first impression, and took a step backwards with it.

Richard Dulude at Underscore VC calls it "one of the most commonly wasted slides in a pitch deck." That's the right frame. Because look at everything this slide could carry:

Who your customer is. How many of them exist. What they'll pay, and why. How you'll reach them. What you sell them next. Where you expand after that. That's your ICP, your pricing, your value proposition, your GTM motion, and your growth plan — all defensible, all in one slide. It's one of the highest-leverage slides in the deck.

Instead, most founders spend it on concentric circles labeled TAM/SAM/SOM, starting with a global number pulled from an analyst report they barely read.

Here's what I tell founders: Do both, in this order.

- Top-down first, and briefly. "The category is $52B, growing 11%, per Gartner." An analyst report is genuinely fine for this. Its only job is to establish that the pond is big enough to be worth fishing in.

- Then bottom-up, for everything else. Because that's the part that proves you can actually catch something.

Show your work: "1,200 US acute-care hospitals with 200+ beds, roughly 80 anesthesia and critical-care physicians each, at $3,500 per seat per year" tells your audience more in one line than any $50B headline. Every input is something they can push on, and you can defend.

Are the numbers for the VCs or for you?

A defensible bottom-up number is necessary, but it is not sufficient. Your build still has to arrive somewhere that matters. Again, this is not for the VCs, it's first of all for you. You are your own biggest investor, and you are the one in charge of deciding whether your company is VC-fundable or not. If it's not, that's OK; there are other funding options. I've described several in earlier posts here and here.

To be worth $1.5B+ you need north of $150M in revenue. This is the outcome that moves the needle for a larger VC fund, and gets their interest. (Smaller funds may have lower bars). Therefore, your addressable market needs to be in the several billions. As a founder, you need to be comfortable with this. (Analogy: it's your decision whether you want to play basketball today. But if you decide you do, you need to know and be comfortable with the rules).

So "show your beachhead calculations" is only half the advice. VCs will take note if you are aiming too low. Your short slide deck doesn't have time for nuance; you need to connect the dots for your audience. Show your work, and start narrow enough that the first number is real. Then show the path that gets you somewhere worth the fund's time.

TheTAM/SAM/SOM slide doing its job - Top-down and Bottom-up calcs that show how you will grow over time. A slide along these lines builds credibility with your VC audience.

Three pieces I'd send any founder working on this:

→ Underscore VC on the "TAM/SAM/SOM Trap" — real anonymized examples of weak slides next to a strong one. Rare and genuinely useful.

→ Euclid Ventures, "Market Sizing in Vertical AI" (Jan 2025) — pushes back on VCs too. They analyzed ~100 public software companies and found TAM barely correlates with enterprise value. "The ability to grow TAM is more important than TAM itself."

→ And one of the originals: Mark Suster's "Pitfalls in Market Sizing", where he named this the "1% of China problem." Written in 2009. Still a fast way to lose a room in 2026.

That Euclid piece is the nuance I'd want founders to sit with. The answer to a lazy market slide isn't a more conservative one. It's a specific beachhead plus a credible story about how you grow from it into a gigantic global market.

Your market slide is a free opportunity to prove you've done the homework and build credibility with your VC audience about your aspirations to grow your company. Take it, don't waste it. _________________ What are your thoughts? Share them in the comments. If you liked this post, please send it to a friend. Want some help with your own startup and fundraising process? Please reach out.

Landon Steele is a startup consultant, angel investor, and advisor to early-stage founders. She is based in Vancouver, BC. She works with founders and the ecosystems that fund them across Canada and the US. Learn more at steeleconsultinggroup.com