Thread by @axeliaklein

Which slide is both the least and the most important one in your pitch deck?

Answer: The market size slide

Why? Numbers are generally always overestimated but still something investors want to feel comfort around.

5 steps on how to make a great market size slide:

1) Don't google "Market size X" and pick the highest number you can find

Market reports seldom correspond 100% with what you are building, and often show bloated numbers.

Hence these numbers should not let investors question your judgement by being put into your deck.

2) Read about the market and collect data points

So what to do?

By founding a company you are becoming an expert in your specific niche.

A great start to build on the knowledge you already have is to collect specific data points related to your industry.

3) Do the math

Now when you have a bunch of interesting data points you can start to calculate your market size.

A VERY simplified formula being:

(Entities who experience a problem) x (What they would pay for a solution) = TAM (Total Addressable Market)

4) Sanity check

You have done the above and arrived at a conclusion.

Now try to find arguments to shoot this number down.

Is your solution really suitable for all SMEs? How valuable are other startups with a similar value prop?

Still makes sense -> put it in your slide.

5) Show your input data points & sources

Together with your final number show the figures / stats that led up to your estimate.

By doing so investors can arrive at the same conclusion you have, with the added bonus that you will showcase deep industry knowledge upfront.

Final remark:

Investors might (unfortunately) have a bias towards the market size of certain industries.

If you know the market is big AND you have sound data to back it up you will significantly minimise the risk of getting the "too small market" response!