This article is part of the Startup Coach series, by Early Game Ventures, dedicated entirely to the pitch deck — the most important document you will write as a founder looking to raise VC funding. The series walks through, step by step, the structure of a compelling deck: from how you shape the story to what each individual slide should contain.

There’s a nearly universal ritual in pitch decks: the founder gets to the market slide, projects a graph with three concentric circles — TAM (Total Addressable Market), SAM (Serviceable Available Market), SOM (Serviceable Obtainable Market) — and announces that the total market is worth $47 billion, that the addressable market is $12 billion, and that they’re targeting 1%, or $120 million, which is clearly a huge opportunity.

No investor is convinced by this slide. Not because the numbers are necessarily wrong, but because they don’t tell you anything about the startup in front of them. Anyone can look up a Gartner or Statista report and pull up a big number. That doesn’t prove you understand the market; it proves you know how to search. 

Bottom-up vs. top-down: what do investors prefer and why

There are two methods for calculating market size, and choosing one or the other says something about the founder's maturity.

The top-down approach starts from the total size of an industry and applies successive percentages to arrive at an addressable figure. "The global HR software market is $30 billion. We focus on Eastern Europe, which represents 8%, or ~2.4 billion. Of that, our specific segment is 15%, or 360 million." The method makes sense, but it has a fundamental problem: each percentage applied is an estimate on top of another estimate, and the errors multiply. The result is a number with apparent precision, but with a fragile foundation.

The bottom-up approach starts the other way around: from market reality. How many potential customers are there in your target segment? How much does such a customer pay today for a similar solution or for manually solving the problem you are automating? How much can you capture in the first three years for real, given the sales cycle and the capacity of your sales team? You multiply, and you get a number. Small, probably, but real and justifiable.

Investors prefer the bottom-up approach precisely because it is anchored in reality. A founder who can say "there are 4,000 companies in Romania with between 50 and 500 employees who are our ideal customer, each of whom now spends an average of 8,000 euros per year on alternative solutions, and we aim to win 200 such customers in the first year" demonstrates that he has left the office and spoken to the market.

It is an incomparably stronger argument than a figure in any report. Top-down is not wrong in itself — it makes sense especially for enterprise products, where a few large customers represent the bulk of revenue and where budget sizes are easier to estimate from the outside. But even in these cases, anchor the math in real conversations with potential customers, not in industry estimates.

The mistake that investors also make

There’s an irony in all this talk about market size: investors themselves often misjudge how big a market can become if a new technology transforms it.

The cab market was estimated at several billion dollars globally when Uber first raised funding. Investors calculated a TAM based on the number of cabs and the number of rides booked. Uber turned out to be ten times bigger than that estimate, not because it took market share from cabs, but because it created demand that didn’t exist before. People who never took cabs started using Uber every day. The same with Airbnb versus the hotel market. The same with smartphones or PCs versus any initial estimate of the mobile phone or personal computer market.

New technologies don’t just take share from existing markets. They release latent demand, needs that people had but for which there were no affordable or convenient solutions. It democratizes access to things that were once reserved for those with money, time, or the right connections. 

What does this mean specifically for your slide?

First, do the bottom-up math. Show that you know who your customers are, how many customers are in the market, and how much they pay. That's the foundation.

Second, if your product has the potential to create or unlock a latent market, say so explicitly. Not as an excuse for a small TAM, but as a strategic argument. Explain why your solution will bring customers into the market who aren’t buying anything today: because the alternatives are too expensive, too complicated, or simply don’t exist.

Third, avoid building your entire argument around a big number that you're taking 1% of. A VC isn't looking for a company that will capture 1% of a $50 billion market. They're looking for a company that can dominate a specific segment and grow that segment. A $500 million market that you can win 30% of is a stronger argument than a $50 billion market that you're taking a tiny fraction of.

The market slide isn't about the biggest number you can put on the screen. It's about demonstrating that you understand who's buying, why they're buying, and how big the opportunity could be if the execution goes well. 

Are you building something ambitious and ready to raise a round? Early Game Ventures is a venture capital fund in the top 10% of European funds, investing between €500K and €2M as a first ticket in European startups — often from the idea stage, before things are “obvious.” We invest in tech companies at the Pre-Seed, Seed, and Series A stages, with a focus on CEE and Europe, as lead investor. If you have a bold thesis and a pitch with substance, write to us at office@earlygame.vc or send us your deck directly at earlygame.vc.