What is SOM in Startups?
Introduction
SOM (Serviceable Obtainable Market) refers to the realistic portion of the market that a startup can capture based on its resources, competition, and market reach. It is a subset of SAM (Serviceable Available Market) and helps businesses set achievable revenue goals.
Why is SOM Important for Startups?
✅ Realistic Growth Estimation – Helps startups set practical revenue targets.
✅ Investor Confidence – Investors prefer startups with a clear, achievable market strategy.
✅ Better Resource Allocation – Startups can focus on profitable customer segments.
How SOM Fits into Market Sizing
| Term | Meaning | Example (Food Delivery Startup) |
|---|---|---|
| TAM (Total Addressable Market) | Entire market if 100% customers are captured. | ₹2,50,000 crore |
| SAM (Serviceable Available Market) | The portion of TAM a startup can realistically serve. | ₹1,00,000 crore |
| SOM (Serviceable Obtainable Market) | The actual market share a startup can capture. | ₹10,000 crore |
Example Calculation
A food delivery startup operates only in 5 metro cities, serving a limited number of users. If:
- SAM (Total food delivery market in India) = ₹1,00,000 crore
- Startup's expected share = 10% of SAM
Then, SOM = ₹1,00,000 crore × 10% = ₹10,000 crore.
How to Increase SOM?
🚀 Expand to New Cities – Grow beyond initial locations.
🚀 Enhance Marketing Efforts – Increase customer acquisition.
🚀 Improve Customer Retention – Encourage repeat orders.
Conclusion
SOM (Serviceable Obtainable Market) is the most realistic and achievable market share a startup can capture. It helps in goal setting, investor pitching, and strategic planning, making it a key metric for startup success. 📊🔥