It’s a common little dance done between entrepreneurs and the investors they’re trying to win over: “This is a $20 billion market—I’m confident we can grab at least one percent of it.” Investors smile and nod, knowing full well that the entrepreneur is making an educated guess and ponder – even if the market is that large – whether the company could even come close to owning a tiny portion of it.
Precisely knowing a market is a huge advantage to any entrepreneur—both for navigating the space and strategizing, as well as honestly showing an investor what to expect. The problem is that basic data like market size and your company’s ability to access segments of the market is harder knowledge to come by than you’d think.
Recently Russell Conard – the 25 year-old founder and CEO of data management company Ornicept – formulated a standardized schema for more accurately figuring market size out. He did it out of necessity, for himself and his company, and now wants to give it to others—for free.
Conard’s tool, which he calls OMSAT (short for Ornicept Market Size Assessment Tool), is an Excel spreadsheet that entrepreneurs and investors can use to plug in information from the U.S. Bureau of Labor Statistics, plus information from a particular company, and get a more accurate picture of a given market space. These can be used to present to investors. “A lot of times people end up building the tool that they wish they had, and this is pretty much a case of that.”
Having already raised some $600,000 last May, Conard built the tool while looking for investors to facilitate Ornicept’s A-round, which is still in the works. Using the data on hand, this formula can target specific groups of professionals in a given industry to figure out who might well be a customer for a product, rather than falsely assuming that everyone is. The file is downloaded with Ornicept’s numbers already plugged in – in green – and new users of the tool replace them with data from their own companies. Expected income per customer per year is tabulated, as is discounting and other promotion.
The tool specifically targets market size in businesses that rely on a number of users paying for a product or service. Expected value per user per year and other market data is pasted into the Excel spreadsheet, the workbook then calculates a bottom-up market size valuation. With focus, a result can be achieved within two-to-three hours of plugging in numbers, claims Conard.
Conard – who is one of FORBES’ 30 Under 30 for 2014 – is giving OMSAT away on the company’s website as a download for two reasons: he wants to help startups with their analytics and he’s too busy working on the products Ornicept is developing already to worry about marketing and selling yet another one in a different product category. “I figure that we’ve benefited a huge amount from being a part of a strong entrepreneurial ecosystem and this is, I think, a helpful part of that.”
Original Source: http://www.forbes.com/sites/karstenstrauss/2014/11/03/want-another-tool-to-help-your-startup-get-off-the-ground-heres-one-and-its-free/
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