Market Analysis

Agenda

Recording for Class Announcements & Feedback Theory Concepts Examples Application Assignment

Recording for Class

Start Recording

Link Available

Announcements & Feedback

Break into VC

Review the historical case — Theranos — as a way to review the vocabulary

How the vocabulary connects

The learnings of the VC industry

Theory

Abaca Venture Levels

Level

Typical Funding

Market

Acquirer IPO

We have a clear leadership position in the market.

VC: Series C, D+

We have clear partnerships driving growth.

VC: Series B, C

Our sales cycle is repeatable and data-backed.

VC: Series A

Our suppliers & customers are data-driven and growing.

VC: Seed + Angel

We have early traction with partnerships forming.

Angel Friends & Family

We have early partnerships forming.

Angel Friends & Family Personal Credit

We know there’s a clear opportunity for us in our industry.

Friends & Family Personal Credit

We know the general market size and opportunity.

Friends & Family Personal Credit

We know the target customer exists and is reachable.

Concepts

How to calculate your total addressable market and make a great TAM slide for investors - For Entrepreneurs

I've seen hundreds of startup pitch decks in my time at Matrix, and have found total addressable market (TAM) slides to be among the most frequently mis-executed. I get the sense they are often included as a formality in an attempt to get VCs to check a mental box and continue on hearing about other [...]

https://www.forentrepreneurs.com/calculating-tam/

Market Size Methods

Top Down — External report

Market size estimate for Yummy Future = the dollars that no longer go to baristas

TAM

Global

$300B — coffee shops make

~$100B — spent on baristas

1% reallocated to robots = $1B

SAM

$500M

50%, US & Europe

SOM

$350M

35%, US

Bottoms Up — Simple model based on pricing

Yummy Future

$10K/machine

100,000 coffee shops

80% of them robots

20% are on the verge of closing and desperate for anything that saves money

20,000 * $10K = $200M

Archive

How much you charge $100K per unit

5M units sold each year (e.g., homes)

7% of units sold are their target market

0.7%

How many units you might sell 350,000

Multiplied together $35B

$350M potential annual revenue per year

What is compound annual growth rate?

Insider's experts choose the best products and services to help make smart decisions with your money ( here's how). In some cases, we receive a commission from our our partners, however, our opinions are our own. Terms apply to offers listed on this page.

https://www.businessinsider.com/personal-finance/cagr

CAGR

Typically accompanies market size reports

Framework

2% CAGR = +20% growth in 10 years

10% CAGR = 3x growth in 10 years

25% CAGR = 10x growth in 10 years

Fitness Tracker Market Analysis, Share | Growth (2022 - 27)

Download Free Sample The fitness tracker market is projected to register a CAGR of 15.7% during the forecast period (2022-2027). During the COVID-19 pandemic, the demand for fitness tracker products has been seen increasing due to a lot of consumption and usage of these devices to monitor heart rate and oxygen levels in the body during the pandemic.

https://www.mordorintelligence.com/industry-reports/fitness-tracker-market

Market Trends

Provide qualitative data

Mordor Intelligence — recommendation

Examples

Fiverr

We recommend BVP invest $3.5m in Fiverr, an Israel-based company that has created a new global marketplace for buying and selling five-dollar “micro-services.”

https://www.bvp.com/memos/fiverr

Shopify

We seek approval for BVP to invest up to $7mm in the Series A financing of Shopify, a provider of e-commerce software to SMBs.

https://www.bvp.com/memos/shopify

Application

Pick a tag (e.g., YCombinator, industry) and illustratively complete the assignment together.

Invest in founders building the future | Wefunder, Home of the Community Round

Get equity and front row seats to the startups and small businesses you love—for as little as $100.

https://wefunder.com/

Invest in founders building the future | Wefunder, Home of the Community Round

Assignment

From your list of 10 startups, choose 3 that you think have the best “market potential” (e.g., biggest market, fastest growing market, best competitive advantage).

Optional: Draft an investment memo section that how you conceptualized market potential (e.g., CAGR, market size, moats) to the data you found available on WeFunder.