Why the market size slide gets skipped
Richard Dulude, co-founder and partner at Underscore VC, calls it "one of the most commonly wasted slides in a pitch deck". His complaint is that founders drop in TAM, SAM and SOM figures without showing the working. In his words: "Those numbers are useless, in my opinion. How did you get there? That's what matters."
I see the same thing from the design side. The typical version is a bullseye of three rings, a dollar figure in each, and an analyst report name in grey at the bottom. It looks finished. It also gives the reader nothing to check, so the eye slides straight past it.
So the brief for this slide is narrower than it looks. Make the arithmetic visible.
What a market size slide should show
Underscore's preferred method is bottom-up: number of customers multiplied by the price they'll pay. Their anonymised example is a hospital product sold to roughly 175 hospitals, with about 80 doctors per hospital using it at $3,500 a year each, which comes to an initial market of around $50M before regional expansion.
That one line of maths is more persuasive than a headline figure in the billions, because an investor can test every part of it. Are there 175 hospitals like that? Will 80 doctors each use it? Is $3,500 a believable price? Each question is a conversation you want to have.
Whitepage Studio's market size guide sets out a similar checklist for what has to be on the slide itself. I'd boil it down to four things:
- A derivation under each number, written as plain maths (customers × price = market)
- A named source and year for every figure that isn't your own calculation
- The geography and customer type each layer covers, labelled on the slide
- A short assumptions footnote in small type, so the detail is there without crowding the headline
Should TAM, SAM and SOM circles be drawn to scale?
Yes, if you use circles at all. Most templates draw three evenly spaced rings, so SOM looks like a healthy third of the market. That's a visual claim the numbers don't support. Oria's layout guide gives the correct rule: "Scale each radius to the square root of its value so circle area, not radius, represents the number."
Here's the catch. Do that honestly and SOM nearly vanishes. Whitepage's guide cites benchmarks of roughly 1% of SAM in year one, rising to 5% by year three. A circle holding 1% of another circle's area has one tenth of its radius. If SAM is itself a slice of TAM, the SOM ring ends up as a dot.
That's why I rarely use the bullseye. When the honest version is unreadable and the readable version is dishonest, the chart type is wrong.
(A sharp investor will notice the even rings, too. Once they spot one decorative chart, they start doubting the real ones.)
Three layouts that work better than the bullseye
Oria lists three layouts: concentric circles, a narrowing funnel and horizontal bars. Whitepage adds a stacked bar for decks covering several regions or product lines, and warns against mixing formats on one slide. Of these, two do most of my work.
- Narrowing funnel: each step is a labelled filter (all US hospitals, then hospitals over a certain size, then those with the right system) with the count and value beside it. The labels are the point. An unlabelled funnel is decoration.
- Equation row: the bottom-up maths written across the slide in large type, customers × price = market, with one short line of evidence under each term. It's my default for seed decks, because the slide reads in the same order the investor thinks.
- Horizontal bars: TAM, SAM and SOM as bars on one scale, values printed at the end of each. Good for later-stage decks where the numbers are larger and the reader wants to compare exact figures.
- Concentric circles: only when the values are close enough that area-scaled rings stay legible, which is rare.
How to label the numbers
The title should be a sentence, not the word "Market". Borrowing Underscore's example, "175 hospitals, a $50M first market" tells the skimming reader the conclusion before they look at the chart.
Then put the big number in the largest type on the slide, the derivation directly underneath in smaller type, and the source line at the bottom. Three levels of hierarchy, read top to bottom. If every number is the same size, nothing gets read first.
Date every figure. Whitepage makes the point that analyst reports lag fast-moving categories, so a market estimate without a year reads as stale even when it isn't.
Last, keep the colour simple. One accent colour for the layer you're claiming (usually SAM or SOM), greys for the rest. The accent tells the reader where you think the business lives.
Where the market size slide goes in a pitch deck
Whitepage puts it at slide four or five of a 12 to 15 slide deck, after problem and solution and before business model and financials. That matches what I do. Put it after the team or the financials and it reads as an afterthought.
The SOM figure also has to agree with the rest of the deck. If the market slide promises far more obtainable revenue than the financials project, the investor will believe neither. The same goes for the plan on your use of funds slide: the hires you're funding should plausibly reach the customers you're counting.
And a narrow market isn't a weakness if the expansion path is clear. Sequoia's own business plan guidance notes that "some of the best companies invent their own markets". A small, well-evidenced first segment with a labelled next step often beats a giant number with no working.
If your deck has the numbers but the slides aren't doing them justice, this is the kind of work I take on.