Chris Dixon General Partner Andreessen Horowitz, angel investor and former entrepreneur
“[VCs] are obsessed with market size [seeking a billion dollar + market].  (Smaller, venture-style investors like angels and seed funds also prioritize market size but are usually more flexible – they’ll often invest when the market is “only” ~$100M).  VC returns tend to be driven by a few big hits in big markets.
For early-stage companies, you should never rely on quantitative analysis to estimate market size. Venture-style startups are bets on broad, secular trends. Good VCs understand this. 
The only way to understand and predict large new markets is through narratives. Some popular current narratives include:  social link sharing is becoming an increasingly significant source of website traffic and somehow will be monetized; mobile devices are becoming powerful enough to replace laptops for most tasks and will unleash a flood of new applications and business models.
As an entrepreneur, you shouldn’t raise VC unless you truly believe a narrative where your company is a billion dollar business.” Chris Dixon, Size markets using narratives, not numbers, April 3, 2010; http://cdixon.org/2010/04/03/size-markets-using-narratives-not-numbers/