How should I communicate the total addressable market (TAM) in a way that resonates with investors?

Author

Ryan Chen
February 24, 2025

Hey there,

Welcome to the Capital Growth Partners newsletter. It is approximately a 4-minute read.

In today's newsletter, we are going to go over some best practices after you exit.


We are going to go over…

  1. How to communicate the Total Addressable Market (TAM) effectively

  1. The biggest mistakes founders make when pitching TAM

Actionable Tip

Investors don’t just want a big market—they want a market you can actually capture.

Most founders either overinflate their TAM with unrealistic assumptions or fail to show how they can carve out a dominant share.

Use a bottom-up approach with clear data sources and a realistic go-to-market strategy to show how you can gain meaningful traction.

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How to Communicate Your TAM in a Way That Resonates with Investors

TAM represents the total demand for your product if you have 100% market penetration. While a large TAM is great, investors care more about how much of it you can realistically capture (Serviceable Available Market, or SAM).

Use a bottom-up approach by using the steps below

  1.  Identify your core customer segments – Who will actually buy your product?

  2. Estimate per-customer revenue – What is the average annual contract value (ACV) or lifetime value (LTV)?

  3. Scale based on real adoption data – How many customers can you realistically reach within 5-10 years?

And then tie it into a narrative where you explain the macro tend and why now alongside your business model.

The biggest mistakes founders make when pitching TAM

Using a top-down approach – Saying “This is a $50B industry, and if we get 1% we win” is lazy and unconvincing.

Lack of credibility – Pulling numbers from generic Google searches instead of industry reports and first-hand research.

No clear path to revenue – Investors don’t just want to know the market size; they want to see how you’ll take market share.

How I Can Help You

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