Market sizing

Forecasting the size of a market that does not exist is tricky and nobody will have the right answer. Googling will result in endless research agencies or investment banks or consulting firms throwing in yet another inconsistent number.

With new markets, it is often as important to convince/teach an investor how to think about the market sizing than getting her to accept the answer, the point estimate. So merely quoting a random number without having a clue how it was derived is not going to help you very much.

So here is an alternative approach: make your own and keep the analysis very transparent. Build a spreadsheet that start with hard facts (populations etc., and slowly, slowly, adds more uncertain numbers. Use different colours for numbers with different confidence levels (green for rock solid all the way down to red for I-made-this-up). Put the resulting market size in your presentation, and add the detailed calculation to the appendix of your presentation.

Now you are on top of your numbers and understand where they are coming from. It shows you know what you are talking about, and you can teach your potential investor how to make her own market estimate.


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