TAM/SAM/SOM Concentric Circles & Bottom-Up Formula — The Visual Language of Investor Persuasion

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When reviewers open a business plan for the first time, they scan diagrams before text. Three concentric circles communicate the TAM/SAM/SOM hierarchy at a glance, because the logic of Total Market → Addressable Market → Ownership Target is immediately conveyed through size alone.

Conveying the same information in prose takes three or more lines, and the reader has to calculate the ratios themselves. With concentric circles, the area ratios are the message. If the proportions look off, reviewers grow skeptical before they even read the numbers.

OpenSeed reports automatically calculate area ratios from the TAM/SAM/SOM figures the founder enters and generate the diagram accordingly. If a logical inconsistency is detected — such as SOM exceeding SAM — it is immediately flagged in the reviewer commentary within the report.

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The concentric-circle diagram in an OpenSeed report consists of three rings, each with a label showing the market name, monetary value, and estimation method (Top-down or Bottom-up).

If the area ratios of the three circles do not match the input figures, or if the SOM label shows no Bottom-up linkage, the market reviewer commentary in the report will note 'numerical consistency check required.'

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While the concentric circles show market hierarchy, the SOM Bottom-up formula diagram visualizes the calculation path behind the SOM figure as a step-by-step flowchart — for example: Potential Customers × Conversion Rate × Average Order Value × 12 months = Annual SOM.

OpenSeed reports read the Bottom-up variables the founder enters — potential customer count, conversion rate, average order value, and so on — and automatically build the formula diagram. Each variable box displays both the input value and the source behind it (proprietary research, pilot measurements, publicly disclosed industry data, etc.).

If any variable in the formula diagram is sourced only as 'estimated,' the financial reviewer commentary will flag that variable with a request to supply a better source. Because the diagram makes this judgment visually obvious, founders can identify what needs fixing much faster than they could from plain text alone.

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When reviewers look at the concentric circles and formula diagram together, they run through four main checks. The more signals come up wrong, the more likely a founder is to be asked for verbal clarification — or to be cut at the screening stage.

The steepest credibility drop comes when the SOM figure in the concentric circles does not match the final output of the Bottom-up formula diagram. Without diagrams, reviewers have to hunt for that discrepancy in prose; with diagrams, the mismatch is immediately visible. Visualization is a weapon for well-constructed numbers and a magnifying glass for sloppy ones.

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Running through the checklist below before submitting your OpenSeed report will reduce the number of reviewer comments attached to your diagrams and help you receive actionable feedback faster on your first report.

1. Does the TAM definition match your business category — exclude overly broad definitions like 'global IT market'
2. Is the SAM segmentation criterion stated — write one line specifying whether it is geography, industry vertical, or customer type
3. Is the SOM conservative relative to SAM — for early-stage startups, a lower figure actually builds more credibility
4. Does the Bottom-up formula include at least three variables — a single 'market size × share' equation is classified as Top-down
5. Is a source or rationale stated for each variable — pilot results, number of customer interviews, publicly disclosed data, etc.
6. Do the concentric-circle area ratios visually match the input figures — always verify against the numbers after the diagram is generated
7. Does the formula's final output match the SOM figure in the body text — if there is a rounding difference, note it in a footnote

If any of the seven items is missing, there is a high chance the relevant reviewer commentary in your OpenSeed report will flag it for revision. Numbers that pass the checklist in advance carry persuasive weight the moment the diagram is generated.

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Q. Can I calculate TAM using a Top-down approach and SOM using a Bottom-up approach?

A. Yes. Defining TAM from top-down data (such as industry reports) and deriving SOM separately with a Bottom-up formula is a mixed approach that is often more persuasive. The hierarchical relationship — SOM ≤ SAM ≤ TAM — must still hold.

Q. Are there cases where the concentric-circle diagram is not generated in an OpenSeed report?

A. If any of the TAM/SAM/SOM figures is missing, or if an inversion occurs (e.g., SOM > TAM), the report returns a reviewer comment requesting corrected figures instead of generating the diagram.

Q. Does a visually polished diagram improve the evaluation?

A. Numerical accuracy takes priority over visual polish. Reviewers look at the numbers, ratios, and source citations in the labels — not the diagram's design. OpenSeed does not score the diagram itself; it returns numerical verification results as commentary.