The total global or regional market demand for a product or service, calculated as the maximum possible annual revenue if the company captured 100% market share.
Why it matters: Investors use TAM to gauge the absolute ceiling of a startup's potential. A venture-scale business typically requires a TAM in the billions.
In practice: If there are 1 million independent restaurants in the world and your software costs $1,000 per year, your TAM is $1 Billion.