"It's a $40B market and we just need 1%" is the fastest way to tell a partner you haven't counted actual buyers. They discount top-down numbers and rebuild the market from the bottom — so you should hand them the bottom-up math already done. Here's the formula they respect, worked end to end.
A top-down number starts from a giant analyst figure and slices off a percentage. The problem is the percentage is arbitrary — nothing in "1% of $40B" tells the partner you understand who pays, how much, or how you reach them. On the market slide, what's actually checked is whether you built the number from a real buyer count or pasted a "$40B (Gartner)" figure. Top-down-only is the tell.
(number of buyers in your geography) × (annual price they pay) × (attainable share)State it as a formula on the slide, with each input sourced or reasoned. A tier-1 analyst number can support the total, but never replace the bottom-up build. Then show SAM (the slice you can actually sell to today) and SOM (what you can realistically capture near-term) as you can defend them.
Say you sell documentation software to outpatient specialty clinics in the US:
| Input | Value | Where it comes from |
|---|---|---|
| Target buyers (US specialty clinics in your segments) | 45,000 | public provider counts / association data |
| Annual contract value | $12,000 | your own pricing × seats per clinic |
| Gross addressable revenue | $540M | 45,000 × $12,000 |
| Attainable share (SAM/TAM realism) | ~35% | segments you can actually serve today |
| Defensible SAM | ~$189M | $540M × 35% |
That $189M is a number you can defend line by line, and it's far more persuasive than "healthcare IT is $X trillion." If it's big enough to build a venture outcome from your share of it, you've made the case; if it isn't, better to find that out yourself than to have a partner rebuild it and discover it for you.
For a marketplace, don't size on headline GMV. Size on GMV × take-rate × durability — because the take-rate is your actual revenue, and investors discount thin or single-category take-rates. A $500M GMV marketplace at a 6% take-rate that erodes to 4% at scale is a very different business from one holding 12%. Show the net-revenue math, not the gross flow. (See how take-rate is presented in metrics by stage.)
The report shows the bottom-up build for your model and flags a top-down market as a red flag before an investor does.
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