During today’s roundtable, I found myself discussing Total Available Market (TAM) issues with three of the five presenters. So let me start off by providing some guidance on the topic for all of them as well as others who are facing similar challenges.
Folks, there can be no financing without a thorough articulation of market sizing. And market sizing, in our book, means a well-formulated Bottom-up TAM analysis with clear business model and pricing model assumptions. If you do not have this analysis, please put it together.
Once you have it, you need it to determine your fundability. Thumb rule: A small TAM means you CANNOT and SHOULD NOT raise financing. A large TAM means you may be able to raise money, provided the other requirements of fundability are met.
First, Anuroop Iyengar from Bangalore, India, pitched Cogknit Semantics, a semantic modeling engine for building educational content for universities, schools, etc. Anuroop has two universities in India already in discussion and three others in the pipeline. My feedback on the business is that the sales cycles for this business will be very long, and unless Anuroop seeds the platform with enough content that allows the universities to start using the system right away, they would face an adoption nightmare. If they depend on educators to create all the content that would make the system usable, it would take long, and people simply won’t use it.
Then, Tom McCullough from Bend, Oregon, pitched InstantMobile Solutions, a mobile app based offering for non-profits like the Goodwill Stores to manage their donations process, including tax deduction receipts, donor databases, etc. The company has developed an app for Goodwill Silicon Valley, currently their only client, and is in negotiation with the Goodwill Industries for a broad arrangement to bring their entire chain of stores and locations onto this general framework. In addition, Tom wants to expand the offering to other non-profits who accept in-kind donations and faces the related challenges of tax deduction paperwork, etc. Finally, he wants to bring their retail stores online, and charge transaction fees. The bulk of the discussion for this business was around TAM Analysis and financing.
Next, Darren Atinsky from Davie, Florida, pitched WedWu, describing it as ‘Priceline for wedding services’ like photography, videography, DJ, etc. In other words, brides, grooms, and wedding planners would name their own prices, and service providers would bid for jobs accordingly. Darren generated more than $30k in revenue in 2011 based on the model. Clearly, there is a viable small business here. Is there enough TAM for a large, scalable business? Not sure, until a TAM model is built out.
Then, Sameer Agarwal from Pune, India, pitched Martecker.com, a service for developing marketing videos for technology companies, spanning customer testimonials, product demonstrations, etc., using simple animation and other creative elements. Sameer proposed a price-point of $1500 per video, which, I told him, would only be affordable either for larger companies with substantial revenues, or venture-funded tech startups. I also pointed him to another opportunity at a much lower price-point, say $100 to $200 a month, of providing ongoing video production services for small companies trying to build YouTube channels. They need, say, a video per week.
Both opportunities are viable, and Sameer needs to decide which company he wants to build.
Last, Sudhakar Murugasen from Bangalore, India, pitched SmartCloud, a cloud based testing solution for mobile devices. Sudhakar wants to offer it as an Infrastructure-as-a-Service solution, and have a large portfolio of devices available on-demand for testing purposes for app developers.
The mobile app developer market of Indian vendors building for the Indian market is very small. Sudhakar needs to cater to Indian vendors developing for the U.S. market, which would mean he needs a U.S. operation. A global market would be more complicated from a delivery model standpoint.
You can listen to the recording of this roundtable here.
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