#7 — Large & Growing Market
It’s been a while since I started the 10 Signs of an Angel-Fundable Company, so I figured that it would be good to finish the last couple of tips. Tip #7 will focus on the size of the market that you are trying to penetrate. While this topic is similar to the “idea that is scalable” entry that I posted, there is a difference.
An entrepreneur could possibly enter a very large market, yet be limited by a company that does not scale. Similarly, you could possibly have a scalable business but be limited by a small market.
Let me share an example of how a potentially small market can hurt your chances to raise angel or venture capital:
My oldest brother, Brett, has recently started an innovative online community called OnCampusSports.com. Over the past few weeks, he has had the opportunity to pitch to quite a few angels & VCs in Utah and in the Bay Area. During his first couple of pitches, the feedback that he received from the investors was that the market (college intramural participants) was too small. The company’s vision has always been to target a much larger participant sports community (recreation sports, high school sports, college intramural sports, etc.), but decided to initially penetrate the college intramural community because of the low-hanging fruit. Because the investors were having a hard time seeing beyond the college intramural community (mostly because the company’s name was OnCampusSports), Brett decided to change the name of the company to Rahster.com so that he could effectively communicate the larger vision and larger market opportunity.
As you can see, no matter how strong your concept may be, if you are limited by a small market opportunity you will have a very hard time raising angel or venture capital.
