Good read on market sizing for VCs and entrepreneurs

Not a how to guide, but a higher level meta discussion … about that market size discussion. See here.

I’ve experienced the endless cycle of meetings over “size of market”. Not fun.

These days, I have a very simple classifier with respect to investors.

foreach investor (list_of_investors) {
 if (investor->says_yes_sends_term_sheet_and_check) {
   put_money_to_work_building_value()
  }
 else
  {
   add_to_list_of_investors_who_didnt_say_yes_and_follow_through_with_money()
  }
}

This is pseudo code for the algo you need. Any answer which is yes is good. Any answer which is not yes (which includes “yes, but”, “maybe”, “we will think about it”, and other assorted non-committal versions of “no”), is a “no”.

A little simplistic, but basically correct. If the investor can’t get their mind around the market size, they will find other things they can’t get their mind around. And even if they are a great and wonderful “Midas” (e.g. everything they invest in, returns gold, or unicorns, or special snowflakes), they will waste huge amounts of your time as you try to convince them of something that should be obvious to them (assuming it is correct in the first place*).

* not all things you think are correct, and your analysis could be suspect. You can try to make your case to a friend, and see if they can poke holes in your analysis. If they can, and they are a friendly audience, you probably have some holes you need to fill in. Once the holes are filled, your analysis is self consistent and basically correct, then you can present it to investors. Whom still might not get it.

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