how to evaluate business competition

If your company is trying to raise capital from VC or other investment sources, telling them “we have no competitors” is not going to inspire them with confidence.

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It might sound great to you to have no competition. You have an automatic monopoly and can presumably charge a premium (at least until others get wind of what you’re up to). But even then, you’ve got a head-start. So long as you stay on the cutting edge of development, you’ll leave these Johnny-come-lately’s in the dust.

Perception Hurdles to Raising Investment Capital for Your Startup

That’s not how investors see it, though. They see three possibilities, none of which are likely to make them want to inject funding into your startup.

1. The thing you’re selling is not unique after all. You just haven’t done your industry and competitor research properly. I’ve seen plenty of company reps turn a pale shade of green when an investor getting pitched asks them, “What about company X? Or company Y? I just bought from them last month…”
2. Your company is selling a substitution product. You’ve invented what you think would be a great alternative to skis. Well, every ski manufacturer is still an indirect competitor. And it’s very difficult to succeed with substitution products because you have to change consumer behavior (not impossible – but investors want low risk and high reward).
3. The thing you’re selling actually is unique. But it solves no pain point and has no obvious customer (which is why no competitors have emerged).

When you’re talking about competitors in front of investors, use this as an opportunity to talk about what makes you different. How is your product more efficient, or how does offer more options than the other offerings?

• “As you can see, our process makes the service 50 percent more effective, so the customer gets better ROI.”
• “Our blender doesn’t just blend – it slices, dices and minces faster and easier than any other kitchen tool on the market today.”

To avoid a rude awakening at an investor pitch meeting, it’s important to do your research.

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