VC case study question!!
Hi Everyone! I'm currently working on a VC case study where I have to come up with an investment memo for a SaaS company. The team sent over a bunch of data / info on the company, and one of the steps includes a TAM calculation. In the company overview deck, they included a SOM Calculation, that had the number of addressable firms and the annual contract value. The table then showed the SOM calculation which was taking a % of that TAM (so it showed like 5% capture, 10%, 15% capture etc.). My question is - can I use those numbers for my calculation? The # of addressable firms and the annual contract value? Or should I go out and come up with my own? I know this might be a dumb question but I'm very much not sure. Also, using those numbers gives a relatively low TAM of ~$700M. Thanks in advance everyone!!!
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You could, you can either take their TAM/SAM/SOM etc or you take the annual contract value multiplied by number of businesses or if its B2C take the yearly cost and users in their market.
Either way a good rule of thumb is if its below $1bn probably not an exciting market to invest in, your also going to want to highlight other players if its Neobank for example if the company your looking at has maybe 1% of the market based on your TAM value you want to look at the other players such as Revolut, Starling Bank etc and you want to compare what the market share of the opportunity is versus those huge players.
All their looking for is whether your able to look at a market and make a recommendation based on all available data. it should be a go no go on a few things but you should mention the initial market they are in, how likely expansion is such as if its a french company trying to expand into Germany you can mention historically companies have struggled.
hope this helps
Thanks
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This is intellectually interesting question. Would be happy to provide you Pitchbook data to help you navigate the questions.
What else did they ask of you in the case study? Have a VC case study of my own coming up which includes an investment memo and supporting analysis
have VC and growth equity cases / memos, dm.
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vFinal webite has a practice case study you can use for software interview prep
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