Advice for (Aspiring) VCs on Creating a Market Map

As you may know, I’ve been transitioning into Venture roles to support funds with AI due diligence (pre-investment) and help fund portfolio companies on growth (post-investment) with the help of the Venture Partners Fellowship (VPF) and the Venture Institute of VC Lab. VPF introduced me to Achebe Capital for a summer internship.

One of our projects this summer was to understand the industry/industries that form the fund’s thesis to develop a market map to assist in decision-making. Here’s advice to get you started on creating your own.

Please note: I have no affiliation with any of the resources mentioned in this article.

Step 1: Start with the End Goal

We know we want to support the decision-making process; now it’s time to uncover what that means! How will the market map be used?

• Is it to help with sourcing? Can we understand the current investment landscape in a given industry to uncover undervalued venture-scale opportunities for investment?

• Is it to help with due diligence? What does the competitive landscape look like to help inform opportunities and saturation in the market?

• Is it to help portfolio companies maximize their chances of an exit? What revenue (and other metrics) do comparable companies exit at to inform a portfolio company’s milestones in subsequent rounds?

• Is it something else entirely? 

As I share in this blog post (in footnote 13), one way to navigate this discussion is to “ask the collaborator … ‘What will [the market map] tell you? How do you see yourself using it?’” to better understand what they’re looking for and help them make better decisions.

Don’t forget to ask about the format for the market map! 

• Would your collaborator like a visualization of logos (such as this example for the Data/ML/AI landscape created by FirstMark in CB Insights Market Maker)?

• Or would a Google Sheet or Google Doc with trends and start-ups suffice?

• Are there any other details that we should add/include? Or requirements about its use?

Also, don’t forget to discuss checkpoints and deadlines! Will this be an ongoing research piece, an MVP to inform the next decision, or something else entirely?

Step 2: Scope

Since the market is constantly changing, understanding the scope of the initial work (and its iterations) will be key. 

• Is there a time period or (sub)sector(s) that we should or should not focus on?  

• What criteria should we use to include start-ups in the map? 

• If the end goal is sourcing, should we do initial diligence on them? 

Step 3: Strategies for (free) Research 

As research around competitors and exits is a bit more straightforward (and follows a relatively similar process), I’ll focus on sharing advice around research ahead of creating a market to support sourcing.

There are many (premium) subscriptions on the market. I’ll share advice about what you can find for free online. 

• I imagine you already Google and use Crunchbase! How about Tracxn, which my VPF cohort colleague, Tanya Singh, recommended? And the Dealroom?

  • • I’ve found Googling “<topic> trends startups investment 2024” and reviewing articles helps me understand common themes and different opportunities in the market.

• Don’t reinvent the wheel! Start by finding existing reports, thought leadership pieces, or market maps.

  • • I’ve found Googling “market map <topic> startups 2024” and viewing the “images” on the topic, filtering the results to the past year (in “Tools” below the search bar) helps me find market maps of logos on the subject.

  • Here’s a sample thought leadership piece by Kevin Zhang on “Investing in the Age of Generative AI,” which provides an overview of the market and opportunities.

• Customers pay for services because they bring them value: 

  • • D2C companies do so in 1+ of 30 ways;

    • B2B companies do so in 1+ of 40 ways. Collecting how each start-up in the market map (bullet above) brings value to its customers can help us identify investment themes in the market for that industry. Is productivity the most funded category in the space?

• Find (near) synonyms for the same industry to understand the market better.

  • • For example, “care” may touch on HealthTech (including mental health and SaaS infrastructure used in healthcare), CareTech, Longevity, FamTech, FemTech, AgeTech, or industry-agnostic SaaS!

• Based on what you know about the market, is there anything else we should add/include?

Step 4: Putting Things Together

Start small, get feedback, and iterate. There’s a good chance the stakeholder already has a vision for what they want it to look like and how to use it. Discussing those small steps/milestones and then sharing the progress will help you get there while being on the same page. You’ll collaborate on that vision—or find that amending it together makes it even better!

Good luck!