TAM, SAM, SOM: The Three Numbers Every Researcher Must Know Before Talking to an Investor

You have spent years developing a technology that works. The science is solid. The results are reproducible. Now someone asks you: «How big is your market?»

If your answer is «huge» or a number you found in a sector report without knowing exactly what it means, you have a problem. Not because the market is not big — it probably is. But because investors are not asking how big the world is. They are asking how much of it you can actually reach, and how much of that you can realistically win.

That distinction is what TAM, SAM and SOM are designed to clarify.

Three Circles, Three Questions

Think of the market as three concentric circles, each one more precise and more honest than the one before it.

TAM — Total Addressable Market

The outermost circle. TAM is the entire universe of potential demand for your solution — everyone in the world who could theoretically benefit from it, if price, geography, regulation and distribution were no obstacle.

TAM is useful for framing ambition. It tells a story about the size of the opportunity. But on its own, it is almost meaningless for early-stage investors. A deep-tech startup in microbiome therapeutics cannot serve the global healthcare market on day one. TAM says nothing about what you can actually do.

SAM — Serviceable Available Market

The middle circle. SAM is the portion of TAM you can realistically reach with your current business model, distribution capacity, and geographic focus. It is filtered by your technology’s application, your go-to-market approach, and the regulatory environment you operate in.

SAM is where the serious conversation starts. It forces you to make choices: Which customer segment? Which geography? Which application of the technology comes first? A well-defined SAM shows an investor that you understand your market — not just its theoretical size.

SOM — Serviceable Obtainable Market

The inner circle. SOM is what you can realistically capture in the next 3 to 5 years, given your resources, competitive landscape, and stage of development. It is the number that should appear in your financial projections.

SOM is the most honest number of the three — and the most scrutinised. If your SOM is too large relative to your team and capital plan, it signals wishful thinking. If it is too small relative to your SAM, it raises questions about your ambition. Getting SOM right is a strategic exercise, not an accounting one.

Why Researchers Struggle with This Framework

The most common mistake we see in academic spin-offs is building the analysis top-down: starting with a large TAM from an industry report, applying a vague percentage to get SAM, and then applying another vague percentage to get SOM. The result looks numerical but is not grounded in anything real.

The right approach is bottom-up. Start with SOM: who are the first 10 customers, what will they pay, and how will you reach them? Build from that to SAM — how many more customers like them exist within your reach? Then contextualise against TAM to show the long-term opportunity.

Bottom-up market sizing is harder. It requires customer conversations, pricing assumptions, and honest answers about distribution. But it is the only version that survives a serious investor conversation.

How This Connects to BRL

In our evaluation process at Ivoro Ventures, market sizing is part of Business Readiness Level (BRL). A team at BRL 3 has a preliminary market view. A team at BRL 5 has validated it through real conversations. A team at BRL 7 has customers demonstrating willingness to pay.

The progression from TAM to SAM to SOM mirrors that journey. Each circle requires a higher degree of validation — and a closer connection to real market behaviour.

If you can define your SOM with confidence and explain the assumptions behind it, you are already at a meaningfully different level of readiness than a team that can only cite a sector report.

A Practical Starting Point

Before your next investor conversation, answer these three questions:

Who are the first five organisations that would buy or license your technology in the next 18 months? What would they pay, and why? That is your SOM foundation.

How many more organisations like them exist within your addressable geography and regulatory reach? That is your SAM.

What is the long-term ceiling if the technology achieves its full potential across all applications and markets? That is your TAM.

Three questions. Three honest answers. That is all it takes to move from a number in a report to a market argument that investors can actually work with.

Ivoro Ventures is a venture architect and building firm specialized in transforming deep-tech science into investable companies. We work at the intersection of science, investment and commercialization — with a focus on agrifood tech, health and bioeconomy.