How Big A Market Should A Startup Company Target?

The best way to destroy your credibility with investors is to say we are going to attack, and own, a multi-billion dollar market. Although this may intuitively seem to attract investors, in actuality it is a fatal mistake raising capital. Your credibility using $100B or $1 trillion markets is shot to hell. Here is why.  

No startup should be going after a market larger than $1B five years out. An ideal market niche size is between $100M and $250M. Niching down is not optional. It is basically suicide to tackle huge markets. Even better is a series of niches in a portfolio of markets shown below.

I have often done with 100% success a “Portfolio of niches” strategy for market entry. This means laying out and ranking many niches and then prioritizing them by various factors.  And it sets you up to be very agile, too. The product roadmap and target niches expand each year, as shown below. The first chart shows the long-term market potential for a horizontal product...

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