The Lazy Market Math That Kills Your Pitch

Author

Ashish Kumar
April 14, 2025 • Estimated Reading Time: 3 minutes

You’re pitching your startup and proudly say:

“The market is worth $10 billion.

If we capture just 1%, that’s $100 million!”

You expect investors to be impressed.

Instead, they look disappointed.

One sighs.

Another scribbles something on their notepad.

Moments later, the meeting is over.

What went wrong?

You just fell into the ‘Just 1% of the Market’ trap—one of the biggest red flags in startup pitches.

Why This Approach Fails

Investors hate this kind of market sizing because it shows:

  1. A lack of strategy. You’re assuming customers will magically show up instead of explaining how you’ll reach them.

  2. No real understanding of market dynamics. Markets aren’t giant pots of money waiting to be scooped up.

  3. No competitive differentiation. Why would customers choose you over existing solutions?

What Investors Actually Want to See

Instead of top-down market sizing (total market ÷ arbitrary %), investors want a bottom-up approach that proves:

  • Who your real customers are

  • How you’ll acquire them

  • What portion of the market you can realistically capture

Example: Instead of saying, “1% of a $10B market = $100M,” say:
“We’re targeting SMB retailers in the U.S. There are 500,000 businesses spending an average of $5,000 per year on solutions like ours. Capturing 5,000 customers in 3 years puts us at $25M in ARR.”

How to Present a Credible Market Size

  1. Define Your Beachhead Market

    • Start with a specific customer segment (not the entire industry).

    • Example: Instead of “All e-commerce,” focus on “DTC brands doing $1M+ in annual sales.”

  2. Use a Bottom-Up Approach

    • How many potential customers fit your profile?

    • How much will each spend?

    • How will you reach them?

  3. Show Traction and Growth Path

    • Investors love data. Show initial traction and how you’ll scale.

    • Example: “We’ve acquired 500 customers organically. With a CAC of $200 and LTV of $3,000, we plan to scale using targeted ads and partnerships.”

YOUTUBE TREASURE

👉My Pick: 9 Months Zero Code, $75M Raised