Top down vs bottom up market sizing gives you two routes to one number. Bottom up builds the market from what one customer spends, top down starts from a published total, and a market size an investor trusts is one where both routes land in the same place.
The founder runs a travel platform that works with downtown districts and the groups that market cities to visitors. It was raising a seed round and came to us for its pitch materials and the model behind them. Its market slide had a very large number on it.
Before we write a slide, we build a fact ledger. Every claim goes on it with a primary source, or it doesn't go in the deck as a fact. On this job the ledger ended up with 11 verified facts and 7 banned claims. One was a popular figure about young travellers that we couldn't trace. We swapped in a real survey that asked the question.
Then we checked the market slides line by line against company filings. We found three problems.
A revenue line with the wrong label
One slice of the market added up the yearly revenue of the four biggest booking sites. The slide called it commission revenue. It was total company revenue, which includes advertising and other income. The figure was right and the label was wrong. An investor with the annual report open would spot it fast.
A plug and a double count
The same slice had a fourth block for "other booking sites". It didn't come from any source. It was the amount needed to reach the total, and it made up a quarter of the number. Published data put the smaller listed players at about a third of that size.
The narrowest slice counted the organisations the company could sell to. It got there by adding the customer lists of two software vendors that serve city marketers. Those two vendors are partners, and many cities use both, so they were counted twice. One of the lists also included hotels and tour operators. The total came out at more than double the membership of the industry's main trade body.
Together, the three problems made the whole market look guessed.
One trip, two routes: bottom up and top down
So we built the market from a single trip. We started with what a typical trip costs, from a published travel survey. Then we kept only the part a platform can take a fee on, such as rooms and tours. Then we took the share that's booked through a platform, and the average fee the largest platforms report. That gives the fee on one trip.
Multiply by the number of trips, add visitors from abroad, and you get the bottom-up market. Then we checked it from the top. We took total online agency bookings in that market and applied the same blended fee. The two routes landed on the same figure, so an investor can pick either path and get our answer.
The headline fell to under a fifth of the old number. It's smaller, and it holds. Every figure on the rebuilt slides carries its source link, and a full sources slide sits at the end.
We also audited the model's logic. The balance sheet tied out every month. The biggest exposure was that each new city booked at full speed from its first month, which pulls revenue forward. We flagged it so the founder would have an answer ready.
What we built
- A fact ledger that sorts every claim by whether a primary source backs it
- A market report rebuilt from the trip up, with a source on every figure
- A logic audit of the three-statement model, with five findings to tighten
- A pitch deck and a valuation built on the same facts
- An investor portal for the materials
Why it matters for your raise
Investors don't take a market number on trust. Many of them will rebuild it on the back of an envelope while you talk. If their number and yours don't meet, the rest of the meeting is spent on that gap.
A smaller number with a clear path to it does more for you than a big one with a plug inside.
Build your market size from one customer's spending, then check it against a published total. If the two don't meet, fix the number before an investor finds the gap.
Questions founders ask
What is the difference between top down and bottom up market sizing?
Top down starts with a big published figure, like total online bookings in a market, and narrows it to the part you can serve. Bottom up starts with one customer, what they spend and the fee you take, then multiplies by the number of customers. Investors trust bottom up more because they can check each step. Doing both, and seeing them meet, is stronger still.
How do you calculate TAM, SAM and SOM for a startup?
TAM is the total market for what you sell. SAM is the part your product and business model can actually serve. SOM is the share you can realistically win in the next few years. Build each one from sourced figures, never a plug added to reach a round number. Check for double counts, such as two customer lists that overlap, and make sure every figure carries the right label.
How should you show market size in a pitch deck?
Show the number and the path to it. A slide can show the bottom-up build, from one customer's spending to the total, with the top-down check beside it. Put a source on every figure and add a sources slide at the end. A smaller number with a clear path to it does more for you than a big one with a plug inside.