Market Sizing and Opportunity Assessment: How Big Is Real?

What you will learn

• Build a bottom-up market size (instead of a borrowed top-down TAM figure) for a specialist, small-market context like New Zealand
• Use the Business Model Canvas as a validation tool, working through a real New Zealand research-derived venture
• Sort evidence for an opportunity into proven, credible, and optimistic tiers, and see how that changes the honest size of the number
• Produce a one-page, defensible opportunity assessment for your own work

Two earlier lessons ended with a rough sketch: a Moat Map, a Business Model Canvas. Both assumed a market existed for whatever you sketched. This lesson tests that assumption before you build anything on top of it.

Why Top-Down Market Sizing Breaks for Researchers

The standard startup-world move is to find an industry report, quote a multi-billion-dollar global market figure, and claim some small percentage of it (top-down approach). This works badly for research-derived ventures, and it works especially badly in New Zealand: the addressable market for a specialist scientific service, tool, or dataset is rarely a slice of a huge global category. It is a specific, countable set of institutions, labs, companies, or funders who would actually buy the specific thing on offer (the bottom-up calculation).

Sprint TODO: open with a short, concrete example of a borrowed top-down number failing a NZ research venture (real or realistic composite), contrasted with what a bottom-up number would have shown.

Bottom-Up Sizing: TAM, SAM, SOM, Built Not Looked Up

• TAM (Total Addressable Market): every entity that could conceivably use what you offer, counted, not estimated from a report.
• SAM (Serviceable Available Market): the subset you could actually reach and sell to given your current capacity, geography, and credibility.
• SOM (Serviceable Obtainable Market): what you could realistically win in the next one to three years.

For a specialist offering, TAM might be a list of 40 named labs or companies. Small and countable is not a weakness; it is more defensible than a large, imputed number.

The Business Model Canvas as a Validation Tool

The Business Model Types lesson introduced the Business Model Canvas (BMC) as a sketching tool for the Challenge. Here we will use it differently: as a way to stress-test whether a market opportunity is real, by forcing every block (customer segments, value proposition, channels, revenue streams, cost structure) to be filled with evidence rather than assumption. These should be thought of as sketches, you don't have to finish them fully. The value of the BMC is in using it to think through ideas. Throwing away the sketch and re-drawing it again and again is encouraged.

New Zealand Case Study

Sprint TODO: select and write up one or two New Zealand science ventures that scaled from a research base (spin-outs from a CRI, university commercialisation office, or Genomics Aotearoa-adjacent group are good candidates). For each: what market did they think they were sizing, what did they actually find when they counted, and how did the Business Model Canvas blocks look once evidence replaced assumption. This case is reused in the Session gallery walk below.

Evidence Tiers: Proven, Credible, Optimistic

Sort every claim behind your market number into one of three tiers:

• Proven: you have a signed contract, a paying customer, or a documented commitment.
• Credible: you have a strong analogue (someone selling something adjacent succeeded), or direct, specific interest from a named prospect.
• Optimistic: you believe it, but nothing yet supports it beyond your own conviction.

Most first-draft market sizes are almost entirely optimistic-tier claims dressed up as credible ones. The discipline is naming which tier each claim actually belongs to.

Reflection Prompts

1. What is the largest claim in your current thinking about market size that you have never actually tested?
2. If you had to count (not estimate) your TAM today, who would be on the list?

Activity: The Bottom-Up Sizing Drill (20 min)

Activity: Business Model Canvas Gallery Walk (25 min)

Activity: The Evidence Tier Sort (15 min)

Produces a one-page opportunity assessment: a defensible number and an honest account of what is still assumed.

Your Bottom-Up Number

Write your TAM as a named or counted list, your SAM as the realistic subset, and your SOM as a one-to-three-year target. Show your work: how did you arrive at each number?

One-Page Business Model Canvas

Fill in a full canvas for your own opportunity, and for each block, mark whether it is evidenced or assumed.

Evidence Tier Audit

List your three most important claims. For each, name the tier (proven, credible, optimistic) and the single next step that would move it up a tier.

Key Concepts Reference

TAM / SAM / SOM: total, serviceable, and obtainable market, built bottom-up as a counted list rather than a percentage of a borrowed figure.

Business Model Canvas as validation: using the canvas to test whether an opportunity is evidenced, not just to describe an idea.

Evidence tiers: proven (contract or paying customer), credible (strong analogue or named prospect interest), optimistic (unsupported belief).