How to Write a Market Analysis That Shows Real Opportunity
If you sit in a pitch meeting long enough, you’ll notice something: investors rarely get excited by your product demo alone. Instead, they lean forward when you reach the market analysis.
This is the part of your business plan where they decide. So the entire fate of your business heavily depends on how good this section is.
Founders often misunderstand this section. They treat it like an academic requirement:
Describe the industry
List the competitors
Cite the TAM, and move on
But this approach is precisely what causes most market analyses to fall flat. Investors want to see how you think about the world you’re entering.
They want to understand the logic behind your opportunity, what's shaping your market. Plus they want to ensure you know competitive weaknesses and how to use them to grow.
At BillionIdeas we understand these important points. In this article we'll break down exactly how to write a market analysis business plan that reflects what investors actually care about.
So let's get started.
Why Founders Get Market Analysis Wrong
Founders frequently underestimate how quickly investors can spot a weak market analysis.
But is it because the founders don’t know their industry?
Not at all. The problem is that data is present in ways that fail to demonstrate depth, understanding, or specificity.
1. Writing About The Industry, Not Specific Market
A very common mistake is to open with a global industry statistic:
“The global fitness market is $320B.”
But investors immediately recognize this as fluff. They care far less about the total category and far more about the specific segment you’re targeting.
When founders rely on macro-level data, it signals that they haven't spent time identifying who actually buys, how they behave, and why now is the right moment to serve them.
2. Inflating TAM to Look Impressive
Founders think large TAM numbers make them appear more investable. But inflated TAM is a red flag.
Investors often say that unrealistic TAM calculations are a top reason they dismiss a pitch. When your numbers look disconnected from real user behavior or purchasing patterns, investors assume your execution strategy will suffer from the same lack of grounding.
3. Competitor Analysis is Table Of Logos
Many founders copy-paste a competitor matrix that compares features. But this adds no insight.
Every investor has already seen similar grids in a hundred other decks. A superficial outline of competitors tells investors you haven’t studied the actual power dynamics of the market like:
Customer switching costs
Distribution channels
Price anchoring
Workflow lock-in
Competitor SWOT analysis
4. Ignoring Market Behavior
A market isn’t just defined by its size, it's defined by how customers act. Too many founders focus on industry value and growth rates. But they ignore their pain points, purchasing behavior, churn triggers, and decision pathways.
These are the elements investors rely on to judge whether your startup can penetrate the market quickly enough.
5. Skipping Proof
The biggest sin in market analysis is writing everything based on assumptions. Investors are allergic to claims like “customers want X” without interviews, quotes, or real-world indicators.
This is the major cause of rejection. Because investors want concrete evidence backed with data.
What Investors Actually Want From Your Market Analysis
Investors aren’t reading your market analysis to understand the world. They’re reading it to understand your clarity of thought and your ability to spot opportunity before others do.
A strong market analysis doesn’t just present data it interprets it. It must answer:
Is this market big enough and growing?
Is the segment narrow enough to be winnable?
Do customers have a strong enough reason to adopt something new?
Are competitors vulnerable in ways most founders miss?
Is the timing right, based on industry momentum?
A powerful market analysis helps them answer all five, without them needing to ask.
5 Sections To Make a Great Market Analysis
Section 1: Market Size Validation Without Lying (TAM SAM SOM)
TAM SAM SOM analysis is a clarity exercise. Investors look at these numbers to evaluate whether the founder truly understands the market’s structure and the real opportunity available.
TAM: Total Market Demand (Grounded in Behavior, Not Hype)
A credible TAM comes from bottom-up thinking. Instead of using inflated global industry reports, derive TAM from:
actual buyer counts (e.g., number of clinics, SMBs, creators, agencies whichever your market targets)
annual spending patterns from industry surveys or competitor pricing
historical buying behavior (e.g., how often customers replace tools or renew subscriptions)
A grounded TAM doesn’t need to be massive. It needs to be logical.
SAM: The Realistic Slice You Serve
SAM shows investors you can identify the group that actively feels the problem and has the willingness to pay. Investors want to see that you’ve narrowed to a segment whose characteristics are measurable.
Let's understand this with an example, “mid-sized D2C brands spending at least $5k/month on ads.” The clearer the segment, the more confident investors feel about your go-to-market strategy.
SOM: The Portion You Can Capture in 2–3 Years
SOM isn’t executional practice. SOM forces you to confront questions like:
How many customers can you realistically acquire with your current distribution strategy?
What percentage of the active market is reachable with your initial channel?
What is the expected adoption rate based on competitor churn or dissatisfaction?
Investors use this section to judge whether your early-stage trajectory is feasible. Because they don't want to invest in an ambitious fantasy.
Section 2: Prove You Understand Market Behavior
A strong market analysis goes beyond “who the customers are” and tells how they behave. This is where real opportunity emerges.
Investors consistently say that understanding customer psychology often matters more than market size, because it indicates your ability to convert interest into revenue.
A detailed market behavior section covers:
1. How Customers Buy
Different markets have entirely different buying dynamics. Some require long approval chains (B2B enterprise), some rely heavily on peer recommendations (creators, tools for SMBs), and others depend on impulse buying (D2C).
By explaining how your specific segment makes decisions, you show investors you’ve studied the path to adoption.
2. What Prevents Them From Switching
Every market has friction points that slow down adoption. Investors want to see whether you understand the barriers you must break. This includes contract:
Lock-ins
Data migration issues
Onboarding complexity
Compliance requirements
Budget cycles
When you articulate these barriers, it signals maturity. It showed you aren’t blind to the difficulties of market entry.
3. What Triggers Adoption
Markets don’t shift accidentally. Adoption is usually driven by key triggers like regulatory changes, cost pressures, workflow inefficiencies, demographic shifts, or emerging technologies.
Investors want you to connect these triggers to your solution’s relevance. It includes explaining not just why your product is useful, but why this moment makes it especially necessary.
Section 3: Competitive Landscape That Goes Beyond Listing Competitors
A list of competitors does nothing for investors. They already know who is in the market. They care about what those competitors don’t know, can’t do, or won’t do. And most importantly how your startup slots into the overlooked gap.
1. Competitors’ Strengths (beyond features)
Good competitors have real strengths: brand loyalty, entrenched processes, deep integrations, distribution partnerships, or economies of scale. When you acknowledge these, you demonstrate respect for the reality of the market.
It also makes your positioning more credible when you explain where you differ.
2. Competitors’ Weaknesses
Nothing reveals opportunity more clearly than looking at one-star reviews or comment threads where users vent their frustrations. Investors love seeing that you’ve dug into the friction your target segment feels.
Do you know why?
Because these pain points highlight where competitors are failing, not theoretically, but practically.
3. The Gap Only You Can Fill
This is where investor attention peaks. At BillionIdeas we don't frame these gaps generically. Instead we follow a unique approach.
Because a gap shouldn’t be framed as “we are better,” but rather as “this segment is underserved because competitor incentives or business models do not align with solving this problem.”
That angle makes your positioning more strategic, and more believable.
Section 4: Industry Trends With Real Investor Relevance (Not Generic Noise)
If your trends section can apply to any startup in any industry, it’s not well researched. Investors want trends that directly influence your market’s behavior today.
Trends should show:
why the market will grow,
why demand will increase,
why certain segments are becoming more valuable,
why now is the right time,
and why incumbents are slow to adapt.
Generic tech trends make investors lose interest. Contextual trends make them see opportunities from market movements that others haven’t noticed.
For example:
A new regulation that forces companies to adopt certain compliance tools.
A generational shift causing new buying habits.
A workflow change that disrupts existing solutions.
A macroeconomic shift that reshapes spending patterns.
Trends matter when they shift behavior, not when they simply sound impressive.
Section 5: Market Validation (the only thing that truly builds investor confidence)
No matter how detailed your analysis is, nothing builds credibility faster than evidence from real customers. Investors trust market feedback far more than founder logic.
Market validation can include:
interview quotes that reveal pain points
signups on a waiting list
feedback from prototype users
purchase intent surveys
pricing experiments
trials with early adopters
actual revenue traction
Reddit or forum responses testing positioning
When you include data or quotes showing customers are desperate for a solution, frustrated with alternatives, or actively seeking change, investors no longer need to take your word for it. They see the market speaking directly.
A founder with validation is always more fundable than a founder with perfect logic.
To Sum Up
A market analysis is a proof. A winning market analysis doesn’t aim to impress with academic detail. It aims to convince with clarity, evidence, and strategic insight.
A great market analysis proves:
the market is real, not imagined
the segment is reachable, not theoretical
competitors are beatable through focus, not brute force
market timing is favorable, not accidental
customer sentiment supports your entry
If you write a market analysis with this depth, investors stop asking, “Is there really an opportunity here?”
They start asking, “How fast can you execute on it?”
At BillionIdeas we can help you accomplish this. Get in touch with our team of experts now.