I had a good conversation with a successful founder who’s now an angel investor. We discussed his investment criteria. He wants to back founders going after huge or fast-growing markets. Even if they’re small now. In fact, even if they’re new now. No founders in permanently small or shrinking markets, no matter how terrific the founder may be.
Market size is something that’s important for founders to be aware of. Get this right and you’ll have wind in your sails. Big markets are usually easy to spot. Quantifying how big can be a challenge, but knowing a market is big isn’t usually too hard. Fast-growing markets are similar: easy to spot, harder to quantify. Recognizing new markets can be trickier. I don’t have a great rule of thumb and plan to do more research on this, but I think that starting with understanding the problem makes sense. How pervasive is the problem? How painful is it? If tons of untapped customers are experiencing a high level of pain and will readily pay for a solution, you may have found a great new market.
It’s important for founders to understand what type of market they’re going after. Pick the right market and you can ride a tidal wave to success!