Unlocking hidden value: How niche markets are bigger opportunities than VCs think

The easiest way for a VC to kill a deal is to state “The market is too small.”

I happen to think this is the laziest way as well.

Part 1: Why good segmentation matters for big and small markets

It takes work to segment markets.

When market sizing becomes a perfunctory exercise, it can lead to errors.

VCs give horizontal markets, the “mass market,” the benefit of the doubt. If you can sell to everyone, the potential is limitless. We don’t need to measure how big these markets are because they are huge.

Consider project management software for teams. Teams! They are everywhere!

But not all teams are the same. Some may have the power to buy software using their credit card. Others may need IT or VP approval. Some may be agile. Others may be lean. Some are distributed. Others huddle around whiteboards. One project management solution might be right for some but not others. Assuming all these teams are in our market is incorrect; we have not segmented customers.

Industrial markets are not allowed this same benefit of the doubt. Often underestimated, rarely overestimated.

Consider project management software for construction. More specifically, General Contractors. How about the mid-market? We need to do the math here. If you squint…