Market Sizing: B2B Diversity and Equity Analytics Platform

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What is the Total Addressable Market (TAM) for a B2B diversity & equity analytics platform?

There are about 28,373 companies operating in knowledge industries in liberal states that have 250-499 employees, are are currently using SaaS products, and care about diversity. For companies with more than 500 employees, this number is 21,863. This gives a grand total or TAM of 50,236 companies.

If you achieved 10% market penetration and charged companies $5 per user (per year), your annual revenue would likely fall between $3,546,250 on the very, very low-end, and $25,115,000 on the very, very high-end. If you sold your product to 5,023 companies which each had around 500 employees, your annual revenue would be $12,557,500.

Methodology

Since you stated that you were unhappy with your first report, we have started this project over from scratch in order to eliminate any redundancy. In order to find a TAM for your B2B D&E SaaS product, we first began by taking your target market into consideration. Based on this, we analyzed companies which fit the following criteria:

- Companies that have at least 350 employees who are knowledge workers.
- Additional information for companies with 500+ employees who are knowledge workers.
- We have defined knowledge workers as individuals who have 'desk jobs', and work with computers.
- Companies that are likely already using other SaaS products.
- Companies that care about diversity.
- Companies that are likely the majority liberal and operate in a majority liberal geographical region.
- Companies located in the U.S.

In order to determine a TAM for companies that fit these criteria, focused on each of these attributes through several lenses, and used a funnel-down effect to narrow down the market until we landed at an estimate for the number of companies in the U.S. which likely fit within your target market.

In order to locate reputable data for this triangulation, we first began our research by using the American Fact Finder tool provided by the U.S. Census Bureau. This tool allowed us to select certain sets of data we wanted compiled, and then provided us with available data sets which contained the insights we requested. Please note that this data did not differentiate between for-profit and non-profit companies, but rather focuses on companies as a whole. We also utilized reputable industry reports to locate additional data which further allowed us to narrow down the market to give a TAM specific to your target market. Below, you will find a deep dive of our findings.

liberal companies in the U.S.

In order to locate companies which are likely majority liberal and are located in majority liberal geographic locations, we first determined which states in the U.S. are the majority liberal by referring to this 'red and blue' states map provided by the New York Times. This map identified 20 states which are the majority liberal, including the District of Columbia: Washington, Oregon, California, Nevada, Colorado, New Mexico, Minnesota, Illinois, Maine, Vermont, New York, Connecticut, New Jersey, Delaware, Rhode Island, Virginia, Maryland, District of Columbia, Hawaii, and Massachusetts.

American Fact Finder allowed us to search for data sets limited to specific states, therefore we utilized data from the states listed above. There is clearly a discrepancy in utilizing this method, since we assume not all companies in blue states are liberal, and not all companies in red states are conservative, however for the purposes of this research, we believe these differences would likely pan out, and that its likely that the majority of companies in blue states lean towards the left in terms of company values. Therefore, we feel this data is a good representation for determining this TAM.

knowledge-based industries in the u.s.

Once we had the liberal states isolated, we further used the American Fact Finder tool to isolate companies operating within knowledge industries. For this step, we focused on isolating specific knowledge industries overall, rather than further narrowing the results down into sub-industries. This was done in order to cast as wide a net as possible with regard to including as many knowledge-based jobs as possibe. We used our own best judgment to assume which industries qualified as knowledge-industries (i.e. industries where we assume the vast majority of employees work desk-type jobs and utilize computers). Utilizing the industry sectors list provided on the American Fact Finder guided search tool, the industries we identified as knowledge-based industries (along with their associated industry code) are as follows:
51: Information
52: Finance and Insurance
53: Real Estate / Rental / Leasing
54: Professional / Scientific / Technical Services
55: Management of Companies / Enterprises
56: Admin Support / Waste Management / Remediation Services
61: Educational Services
62: Healthcare / Social Support Services

Companies that have at least 350 knowledge workers

After utilizing the AFF guided search tool, we were able to locate this set of data which shows the number of companies in the identified industries, located in the identified states, who have 250-499 total employees and those that have more than 500 employees. While these ranges aren't exactly what you were looking for, these are the most applicable range options available for this data set. There is no range provided which exceeds beyond the 500+ employees range.

Furthermore, while this data shows the total number of employees, we assume that the vast majority of employees working for these companies have desk / computer jobs / knowledge jobs, given the nature of the work being conducted in these industries.

Since the data set provided by the AFF provides a lot of additional data that is not relevant to this request, we have extrapolated the relevant data and organized it into this spreadsheet for your convenience.

We used the data we compiled in the spreadsheet to calculate the total number of companies listed. There is a total of 46,590 companies operating in knowledge industries in liberal states that have 250-499 employees. There is a total of 35,901 companies operating in knowledge industries in liberal states that have more than 500 employees. This gives a grand total of 82,491 companies (i.e. companies that have at least 250 employees).

Companies that are likely already using other saas products

In a survey published by North Bridge, 7 in 10 (70%) of companies stated that they currently use a SaaS product. We used this percentage as a proxy and applied it to the number of companies we have identified above.

Calculations:
70% of 46,590 = 32,613 companies operating in knowledge industries in liberal states that have 250-499 employees and are currently using SaaS products.

70% of 35,901 = About 25,130 companies operating in knowledge industries in liberal states that have 500+ employees and are currently using SaaS products.

70% of 82,491 = About 57,743 companies operating in knowledge industries in liberal states that have at least 250 employees and are currently using SaaS products.

Companies that care about diversity

Lastly, to determine the number of companies that fit the above criteria and who also care about diversity, we utilized a proxy from a PwC survey which states that 87% of companies said that diversity and inclusion "is a stated value or priority for their organization." While this survey was done globally, we assume this proxy would still be applicable to the U.S. It should be noted that we did try to locate a figure which was exclusive to the U.S., however after extensive research through industry reports and trusted media sites, this was the most reputable, relevant, and recently published figure we could locate.

Assuming this figure is in the ballpark for the U.S. exclusively, we applied this proxy to the market sizes we calculated in the section above.

Calculations:
87% of 32,613 = About 28,373 companies operating in knowledge industries in liberal states that have 250-499 employees, are currently using SaaS products, and care about diversity.

87% of 25,130 = About 21,863 companies operating in knowledge industries in liberal states that have 500+ employees, are currently using SaaS products, and care about diversity.

87% of 57,743 = About 50,236 companies operating in knowledge industries in liberal states that have at least 250 employees, are currently using SaaS products, and care about diversity.

TAM for a B2B diversity & equity analytics platform

Based on the target market you provided and the triangulations above, we estimate that the TAM for your product is at least 50,236 companies, and 21,863 for companies with more than 500 employees specifically.

Next, we used these TAM figures to calculate what your annual revenue would be if you were to achieve 10% market penetration and charged companies $5 per user (per year). For further perspective, we have also included a high-end estimate in order to imagine what the revenue would be if some companies had 1,000 employees, since the data set available only shows 500+. Therefore, the calculations below feature both high-end and low-end estimates in order to give a more comprehensive viewpoint.

Calculations:
10% of 28,373 (250-499 employees) = About 2,837 companies.
2,837 companies x 250 employees = 709,250 total employees.
2,837 companies x 499 employees = 1,415,663 total employees.
709,250 total employees x $5.00 = $3,546,250 annual revenue.
1,415,663 total employees x $5.00 = $7,078,315 annual revenue.

10% of 21,863 (500+ employees) = About 2,186 companies.
2,186 companies x 500 employees = 1,093,000 employees.
2,186 companies x 1,000 employees = 2,186,000 employees.
1,093,000 employees x $5.00 = $5,465,000 annual revenue.
2,186,000 employees x $5.00 = $10,930,000 annual revenue.

10% of 50,236 (250+ employees) = About 5,023 companies.
5,023 companies x 250 employees = 1,255,750 employees.
5,023 companies x 500 employees = 2,511,500 employees.
5,023 companies x 1,000 employees = 5,023,000 employees.
1,255,750 employees x $5.00 = $6,278,750 annual revenue.
2,511,500 employees x $5.00 = $12,557,500 annual revenue.
5,023,000 employees x $5.00 = $25,115,000 annual revenue.

Based on these calculations, your annual revenue if you achieved 10% market penetration and charged companies $5 per user (per year) would likely fall between $3,546,250 on the very, very low-end, and $25,115,000 on the very, very high-end. To give an idea of an average, if you sold your product to 5,023 companies which each had around 500 employees, your annual revenue would be $12,557,500. The calculated average of all the above possible revenues is $10,138,687.

CONCLUSION

We have utilized the above triangulations to provide an estimate for the TAM and potential annual revenue for a B2B diversity and equity analytics platform which is targeted at left-leaning companies in majority liberal geographies in the U.S., that care about diversity, use SaaS products, and have around 350 knowledge workers or more.

It is important to keep in mind that these TAM and revenue estimates are based on your target market specifically, and therefore, would be significantly higher if the scope of the target market were expanded (for example, if you targeted all U.S. companies that are interested in diversity, without also limiting the target market to companies that are likely liberal and located in liberal-majority areas). The TAM and revenue estimates we have provided here are exclusively relevant to your specific niche target market.


Sources
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