Back in 2009 we tried to raise venture capital for Pardot. While we didn’t end up raising any money, we did pitch dozens of venture capitalists and had a great experience doing it. One of the things potential investors were most skeptical about was the market opportunity. Even though we had over $1 million in annual recurring revenue and customers said it was a must-have (a painkiller), investors didn’t think it was a big enough market opportunity. Now that the space has three unicorns (billion dollar companies), it’s clear the market is massive.
Here’s how we presented the market opportunity for marketing automation in 2009:
- Marketing teams don’t have a central platform to run their campaigns and track ROI (e.g. accounting has QuickBooks, sales has Salesforce.com, etc)
- B2B online marketing, while smaller than B2C online marketing, is growing fast and benefits from the shift in offline to online advertising
- Roughly 150,000 companies pay for a modern, web-based CRM (Salesforce.com, SugarCRM, Netsuite, and Microsoft Dynamics)
- The vast majority of companies that pay for a modern, web-based CRM need a marketing automation system, yet less than 3% of the market is vended (we cited publicly available customer counts from each CRM vendor and marketing automation vendor)
Thankfully, our market analysis proved to be correct and marketing automation is now a huge market that’s still growing fast.
The next time investors ask about the market opportunity, figure out how to present it in a way that’s compelling and incorporates social proof beyond something written in a Gartner report.
What else? What are some more thoughts on framing a market opportunity and the marketing automation example?
David Cummings on Startups 