Photo: Bill Herndonl via Flickr
Most startups still have a long product roadmap in front of them when they go out to market to raise money. That’s normal and nothing to worry about because savvy, early-stage investors are very focused on what your company is going to be, not what it is now.Wayne Gretzky once said “focus on where the puck is going, not where it is now” – that applies here.
Since investors are buying into what your company is going to be, when you’re presenting the addressable market opportunity your focus should be on your company’s future destination, not the current pit stop.
While your current product may only meet the needs of a portion of the addressable market that you intend to serve or you may have only turned on one of many revenue lines to date, the addressable market that you present should include all viable revenue opportunities that you hope to attack during the life of this business.
Now that I’ve made my argument here – a caveat. The addressable market size of opportunities that require different foci, are exposed to different risk factors, have different costs or serve different customers down the road should be quantified and presented as separate opportunities from the addressable market of the core business.
Where do you draw the line?
Often the current addressable market includes all of the revenue opportunities that you are working toward attacking; the incremental addressable markets are often a second phase of the business and should be presented as such. In my experience, investors appreciate a real assessment of the target addressable market coupled with a quantification of the opportunity of how this business can get even bigger down the road.
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