Our new product is EliteExec Ventures, a one-stop shop for growth stage startups. We are a venture fund that has in house executive recruitment. Growth Stage Startups are where executives make a large impact on the direction of the company.
SOM
As a result, our SOM will be to target all growth stage startups for their VC and executive recruitment needs. According to pitchbook there are 251 growth stage startups as of October 2023. We plan to charge a commission of 20% for each executive we place in the company. According to https://kruzeconsulting.com/blog/startup-ceo-salary-report/#:~:text=Series%20B%20CEOs%20are%20paid,amount%20of%20funding%20raised%2C%20etc., the average series B startup ceo salary is around 250k. Given our price point of 20% per placement, we would net $50k per placement. Additionally, according to https://www.fundz.net/what-is-series-a-funding-series-b-funding-and-more, series B startups have a median valuation at $40M where money raised is around $26M. We want to make money on our initial investments as we are providing executive acquisition consulting services and access to our network of executives. Additionally, we want to mitigate risk that we assume in the startup itself so we are taking relatively low equity with low capital. Each deal will be company specific, but for this exercise we are pricing the average investment to be at $3M for 10% equity. We got these numbers from the $26M median funding raised for series B companies. We wanted to chip in a small but significant portion of the total. This results in roughly $1M return immediately for the investment.
Thus, our SOM would be 251 Growth Stage Startups * (250k Average Startup CEO Salary * 30% Commission + $40M Median Growth Stage Startup Valuation * 10% Average equity share) = $1,022,825,000
SAM
Going from growth stage startups, we want to expand our market geographically. According to HuntScanlon, U.S. total revenue for the executive search industry was $6.5B. Thus, our SAM would be all executive search hires in the U.S. which is $6.5B. We chose to stay in the executive search industry so that we maintain our strong brand and reputation. EliteExec Search is known for its good hires and strong placements, expanding to other hires would dilute our brand and weaken our strong, elite network. In terms of challenges, we would need to displace/acquire all other executive hire firms. However, if we control the growth stage startup market, we will have strong connections with the businesses of tomorrow that will propel us to being the number one executive recruitment firm in the US.
TAM
Finally, our goal for EliteExec Search would be to be the executive acquisition firm for every company in the world. Ranstad’s 2022 Annual Report listed the executive search industry to be $35B worldwide. Therefore, our Total addressable market would be all executive hires in the world or $35B. Expanding internationally comes with the risk that our network based out of the US will have cultural or language differences with other firms globally. Thus, we will need to slowly expand our network internationally starting with promising leaders in startups or business schools.
