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It's important to understand how big an opportunity is before deciding if you are going to invest your time and money (plus possibly other people's money) into a startup. We'll talk through different approaches to figuring this out in this week's lecture.
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Market Opportunity
!Sean Ammirati
Partner, Birchmere Ventures Adjunct Professor, Carnegie Mellon University
#CMULean
Market Opportunities
1. Large Number of Total Potential Customers / Users
2. Rapid Predictable Future Growth
3. Clear path to replicable user / customer acquisition
#CMULean
1. Market Sizing
Total Addressable Market
Served Available Market
Target Market
Top Down Bottom Up
Take key variables in revenue model & multiple by market
data assumptions !!
Example: # of Potential Users x
# of Page Views x (Average RPM in Mkt/1000)
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Sample: VigLink
http://lsvp.com/2011/03/16/how-to-estimate-market-size/
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Real Goal: Make sure this is worth your time!
!
(and your investors money)
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Sample: NoWait
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$185 B
300,000 locations
the table service market.
10% Fine Dining Reservation
$185 B
300,000 locations
casual dining.
!!!!!
OpenTable for Casual Dining
Casual Dining Walk-in
2. Be Weary of Analysts
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Market Types
B2B: used & purchased by businesses
B2C: used & purchased by consumers
B2B2C: sold to business to acquire a consumer
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3. Tools for user / customer acquisition
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For Next Week ...
• Present (~5 minutes):
• A slide with fully flushed out business model canvas
• Focus on Key Parts of Canvas based on business model pattern
• Highlight key assumptions (variables) you would use to build a financial model
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