[ad_1]
Brigid O’Brien has seen her share of pitches from founders, and she has a message for many of them: Not every investor will be impressed by your mega-project TAM, which is short for total addressable market.
“A lot of times people go after big TAMs, which makes a lot of sense, because we’re venture capital investors, so we’re looking for huge returns,” O’Brien, partner at RA Capital Planetary Health, told TechCrunch Disrupt. 2024. “You have to have a market that can help support that.”
“This is probably one of my favorite slides that a lot of people like to do on their presentation deck,” she said. “I’ve seen a lot of presentations that have a trillion-dollar TAM. Sometimes I see $100 trillion.”
This thinking can also lead founders astray, O’Brien added.
“I often tell founders, be intentional about what your market entry is. Sometimes, going after the biggest TAM isn’t necessarily the first step in your journey to build a company. Think about where you have the most potential and highest likelihood of entering the market to generate revenue. Then you can Also going and chasing a larger TAM later on by being able to get that money to help capitalize your company and de-risk some of the technology.
As an example, O’Brien pointed to the approach taken by fellow panelist Gurinder Nagra, co-founder and CEO of Furno Materials. The startup is building small modular kilns that produce cement with a much lower climate impact. It’s in stark contrast to the massive, billion-dollar furnaces that have become the standard among those in the industry.
“What the operators have been really good at is building large, capital-intensive assets, which have been their moats for the last 100 years,” Nagra said. “But in an environment where you need to change, that suddenly becomes a weakness. How can you leverage that as a startup? Because speed is your advantage.”
But instead of taking on incumbents directly, Forno began finding customers in markets currently underserved by cement producers.
“We’ve done road trips and talked to some of these concrete producers. And sure enough, they say, ‘I keep getting non-allocated cement.’ I got some last week, but I didn’t get it this week. Because they’re not a priority. “They are smaller-scale customers,” Nagra said.
Eventually, as the company establishes itself, it will likely begin to attract customers who already have cement supply contracts with existing companies. “There is not a lot of loyalty in the cement business,” he said.
[ad_2]