The biggest mistake is not to include market size in your pitch at all. Investors need to see your logic and understand who you consider your target audience and how you plan to monetize. Ignoring this will leave a big hole in your pitch.

Another easy mistake is to use market sizes from Google or general reports into a market. These numbers often lack relevance to your specific business. While sources like Statista can provide a general market overview, you need to know your numbers intimately. Ideally, build your forecast from the ground up. See this article for detailed guidance on bottom-up market sizing.

Avoid presenting a TAM (Total Addressable Market) that is too generic. If your product is a SaaS AI tool for productivity, don’t use the overall SaaS or AI market size. Your market sizing should be specific to your vertical, such as the global spend on productivity solutions.

Presenting a TAM that is too large is another trap to avoid. You might simply be dealing with a figure lifted from some large consultancy report, giving you an enormous, meaningless, and misleading number. This often happens when you don’t define your industry or vertical well enough. Be specific about the niche you are targeting.

For marketplaces, don’t use overall spending figures without adjustment. If global spending on hotels is $1 trillion, your market size as a hotel booking platform is not $1 trillion—it’s $1 trillion multiplied by your take rate.

Validate all your assumptions. Ensure the data you use is recent, credible, and defendable.

Another lazy approach is claiming you’ll capture 1% of the market to calculate your SOM (Serviceable Obtainable Market). Investors expect a clear plan to achieve 10-20% market share. This mistake often results from overstating your TAM in the first place.

Claiming your estimates are conservative doesn’t cut it with VCs. They prefer a realistic outlook backed up with hard numbers.

To get it right, size your market bottom-up. This means estimating the total audience for your solution and multiplying it by your average check to get your TAM. For SAM (Serviceable Available Market), narrow it down to the audience you’re targeting initially, whether by geography, vertical, or persona. For SOM, estimate the percentage of that audience you can realistically win over. Detailed examples and slides on this process can be found here.