Market Size Slides Deeptech Founders Use That Don't Get Questioned

Market Size Slides That Don't Get Questioned for Deeptech Startups

For a technical founder, the market size slide in a pitch deck often feels like the moment of truth. After detailing groundbreaking science or engineering, you are suddenly asked to become a market analyst. The fear is real: an investor pokes one hole in your Total Addressable Market (TAM) calculation, and your credibility unravels. This is especially acute in deeptech, where you are often creating a market, not just entering one. Sourcing reliable data feels impossible, and building a financial model without a finance background seems daunting.

This is not about finding the perfect Gartner report. It's about building a logical, defensible story that shows investors you understand not just your technology, but the commercial reality it will enter. This guide provides a pragmatic framework for how to calculate market size for a deeptech startup, turning a slide that invites scrutiny into one that builds confidence. See the Pitch Deck Financials hub for related guidance.

Foundational Understanding: The Three-Act Story VCs Need to Hear

Investors are not just looking for a number on this slide; they are looking for a strategic narrative. What they really want to see is your thought process. The classic TAM, SAM, SOM framework is the best way to tell this story. Think of it as a three-act play that demonstrates your vision, focus, and a credible plan for execution.

Act 1: TAM (Total Addressable Market). This is the 'big picture' view, representing the total global demand for a product or service. It answers the question: if every potential customer in the world bought the solution, how big would the annual revenue be? TAM shows investors the ultimate potential and that you are thinking big enough to generate a venture-scale return.

Act 2: SAM (Serviceable Addressable Market). This is your reality check. The SAM is the segment of the TAM that your products or services target and can geographically reach. It narrows the focus to your specific business model and answers the question: of that giant market, who can we realistically sell to?

Act 3: SOM (Serviceable Obtainable Market). This is your execution plan. The SOM is the portion of the SAM you can realistically capture in the near term, typically over the first 3 to 5 years. It is a direct reflection of your go-to-market strategy, sales capabilities, and the competitive landscape. This is the number your financial projections will be built on.

Presenting these three figures together tells a story: you have a massive vision (TAM), a clear and focused target market (SAM), and a believable plan to start winning it (SOM).

A Sanity Check: Why You Need Both Top-Down and Bottom-Up Analysis

When founders ask which method to use for market sizing for investors, the answer is always the same: both. Using top-down and bottom-up analyses together provides the context and credibility needed to make your numbers believable. Each serves a distinct but complementary purpose in your deeptech market analysis.

A top-down analysis starts with a large, macro-level market size from a research firm and attempts to narrow it down to your segment. For example, you might state, "The global cybersecurity market is $173B. Our niche is quantum-resistant encryption for financial services, which we estimate is 1% of that market, making our TAM $1.73B." While useful for establishing the high-level TAM, this approach is built on assumptions that are easily questioned. Relying on it exclusively signals a lack of rigorous, specific analysis.

A bottom-up analysis is the core of your credibility. It is built by identifying the number of potential customers and multiplying that by the average annual revenue you expect from each, known as Annual Contract Value (ACV). This method forces you to answer fundamental business questions: Who is my exact customer? How many of them exist? What is my product worth to them? This granular approach demonstrates a deep understanding of your go-to-market strategy and creates defendable market assumptions.

The practical consequence tends to be that you use both methods as a convergence point. Start with a top-down number to frame the overall opportunity (your TAM). Then, build a meticulous bottom-up case to define your SAM and SOM. If your bottom-up SAM is a reasonable fraction of your top-down TAM, the story holds together. If they are wildly different, it forces you to re-examine your assumptions before you get in front of an investor.

Building Your Bottom-Up Model: The Core of Your Credibility

For a technical founder without a finance team, building a bottom-up model can feel intimidating, but it is more about logic than complex accounting. The reality for most pre-seed to Series B startups is more pragmatic: a well-structured spreadsheet is all you need. Here is how to build one step-by-step.

1. Define and Count Your Target Customers. Get extremely specific. Instead of "aerospace companies," define your segment as "manufacturers of satellites under 500kg based in North America and Europe." Use tools like PitchBook, Crunchbase, or LinkedIn Sales Navigator to build a list and get an actual count of these companies. This is the foundation of your entire model.
2. Justify Your Annual Contract Value (ACV). Your price cannot be arbitrary. For deeptech market analysis, the most powerful way to justify your ACV is to anchor it directly to the value you create. Consider a quantum computing startup selling an optimization solution. Instead of saying, "We will charge $500k," you say, "Our platform saves a large logistics company an average of $10M in annual fuel costs. Our $500k ACV represents a 20x ROI for our customer." This reframes the price from a cost to an investment. Similarly, for a biotech platform, reducing pre-clinical discovery timelines by 6 months can be worth over $100M in accelerated revenue for a blockbuster drug. If your technology enables this, your ACV can be defensibly priced as a fraction of that created value.
3. Calculate Your SAM and SOM. The math is straightforward:
   SAM = (Total Number of Target Customers) x (Your ACV)
   SOM = (Number of Customers You Can Realistically Acquire in 3-5 Years) x (Your ACV)

Case Study: A Bottom-Up Model for ‘AstroMat’

Let’s walk through a mini-case study. Imagine a startup, 'AstroMat', that developed a new radiation-hardened composite material for satellite structures.

• Customer Segment: Smallsat manufacturers.
• Count: Using industry databases, they identify 150 target companies in the USA and UK.
• ACV Justification: The average smallsat requires $100,000 of their material. Their target customer builds five satellites per year, leading to a potential ACV of $500,000 per customer.
• SAM Calculation: 150 companies x $500,000 ACV = $75M SAM.
• SOM Calculation: They project they can win 10% of this market (15 customers) in three years, resulting in a $7.5M SOM.

This bottom-up build tells a compelling story grounded in specific, verifiable data points, forming the basis for investor-ready financial slides.

Finding Defensible Data for Niche Deeptech Markets

One of the biggest pain points for deeptech founders is that their market is often too new or niche to appear in standard industry reports. When you cannot find a report titled "Market for AI-Powered Protein Folding Simulation Software," you need to get creative. Market validation for startups in this position relies on using proxies and alternative data sources.

Use Value Chain Analysis

Instead of looking for data on your specific component, find data on the end market it serves. Our 'AstroMat' example illustrates this perfectly. There are no market reports for their specific composite material. However, we can use an established fact: "The Smallsat manufacturing market is ~$5B" (Euroconsult 2023). AstroMat can then make a defensible assumption that structural materials typically account for 5-10% of a satellite's total manufacturing cost. This gives them a top-down market segment estimate of $250M to $500M, which serves as an excellent sanity check for their bottom-up SAM calculation. For more context, you can review approaches to hardware cost reduction.

Identify Proxy Markets

Find a well-understood, adjacent market that can serve as a comparable. If you are developing a novel biosensor for detecting a specific biomarker, you can analyze the market size for the existing, albeit less efficient, diagnostic tests that it aims to replace or augment. The spending in the existing market validates the budget and need, providing a credible baseline for your own market potential.

Leverage Regulatory and Government Databases

These are often-overlooked goldmines of highly structured data. For a US-based biotech startup, searching the FDA's clinical trial database can reveal exactly how many trials are underway for a particular cancer, providing a precise count of potential customers for a new oncology research platform. For device approvals, the FDA 510(k) process is a key resource. Similarly, teams in the UK and Europe can use the EMA (European Medicines Agency) database for the same purpose. This geographic distinction is important for building a targeted market view.

Conduct Primary Research

Ultimately, the most defensible data comes from talking to your potential customers. Interviewing ten R&D leads at pharmaceutical companies and asking them about their current budget for discovery tools provides a more powerful data point than any third-party report.

Presenting the Slide: From Spreadsheet to Story

Once you have done the hard work of building your model, the final step is to present it clearly and concisely. The goal of the market size slide is to convey the key numbers and the logic behind them without overwhelming your audience. One of the most important deeptech pitch deck tips is to keep the slide simple and place detailed backups in the appendix.

What founders find actually works is a simple, highly visual representation. The most effective formats are concentric circles or a funnel graphic. These visuals intuitively show the relationship between the broad TAM, the focused SAM, and the achievable SOM. Your slide should contain three key elements:

1. The Visual: The circles or funnel with TAM, SAM, and SOM clearly labeled with their respective dollar values.
2. The Definitions: A single, concise line of text defining each layer. For example, for AstroMat:
   • TAM: Global Smallsat Manufacturing Market ($5B)
   • SAM: Addressable Market for Structural Materials in the US & EU ($75M)
   • SOM: Target Revenue in Year 3 ($7.5M)
3. The Core Assumptions: In a small footnote, state the basis of your bottom-up calculation. Example: "SOM based on capturing 15 smallsat manufacturers at an average $500k ACV."

This approach presents a clean, powerful narrative on the slide itself. The appendix is your best friend for handling due diligence. Have one or two backup slides ready with the detailed spreadsheet calculations, data sources, and citations. This shows you are prepared and builds immense trust, turning a potential interrogation into a confident conversation.

Practical Takeaways

Crafting a market size slide that withstands investor scrutiny is less about finding a magic number and more about demonstrating rigorous, logical thinking. For technical founders navigating this process, the focus should remain on credibility and clear communication.

• Frame your market size as a TAM, SAM, and SOM narrative. This shows investors you have a grand vision, a focused strategy, and a realistic execution plan.
• Remember that a bottom-up analysis is non-negotiable. It is the foundation of your credibility, while a top-down view provides essential context.
• Anchor your pricing and ACV to the tangible value you create for your customers to build a powerful business case.
• For new deeptech markets, get creative with your market validation by using value chains, proxy markets, and regulatory databases.
• Present your findings simply on the slide. Keep the detailed calculations in the appendix to prove you have done the work and are ready for due diligence.

See the Pitch Deck Financials hub for further slide templates and guidance on creating investor-ready financial slides.

Frequently Asked Questions

Q: What is the most common mistake founders make with market sizing for investors?
A: The most common mistake is relying solely on a top-down analysis from a market research report. Investors often see this as a red flag. A credible pitch must be built on a rigorous, bottom-up analysis that demonstrates a deep understanding of the customer, their pain points, and your specific go-to-market strategy.

Q: How do I calculate a market size for a technology with multiple potential applications?
A: For technologies with multiple uses, focus on a single, large initial market for your TAM, SAM, and SOM calculations to demonstrate focus. You can mention other potential markets in your narrative as future expansion opportunities, but your core slide should be dedicated to the beachhead market you will win first.

Q: How often should I update my market size calculations?
A: You should revisit your market size assumptions at least annually or whenever a major market event occurs, such as a new competitor launch or significant regulatory change. For an active fundraise, ensure your data is as current as possible, ideally from within the last six months to show diligence.

Q: Is it a problem if my bottom-up SAM is much smaller than the top-down TAM?
A: No, this is expected and can be desirable. A massive TAM shows the overall potential, while a focused SAM demonstrates you have a specific, reachable target market. A huge discrepancy might prompt you to check your assumptions, but a focused SAM is typically a sign of a clear strategy, not a small opportunity.