Founders love to remind investors they have ‘no competition’. This is a giant red flag. More likely than not, the absence of competition is indicative of one or more grave flaws, all of which can kill your chances of getting funded.

First, it might be what is known as a ‘closed opportunity’, i.e., a market that is too small to generate venture-sized returns. Any investor will shy away from markets that don’t present a prospect of healthy growth and a decent exit opportunity. If you have no competition, you likely have no viable market opportunity.

Second, the lack of competitors could signify that you have thought of something no one needs and no one will pay for. If no one else were addressing the same pain point, there might not be a real pain point – your business is not solving a true problem.

Thirdly, you might be too early for the market, which means you’ll have a problem accelerating. If the market is not ready for your solution, it’ll be difficult to grow because you won’t find enough customers to adopt your solution and show traction. 

The way to tackle this is to try to verify if your first-mover advantage is real. Do some digging into the market. Who are the players? Who are the other companies not just in your particular category but in any category that could improve the user experience? Whoever is solving a pain – even if it’s only indirectly related to the pain that you think you’re going to solve – add those companies to your competition slide so you can show them to the investor at the end of the presentation and prove that you know how competitive this space is. People often don’t include competition because they think, ‘Well, it’s not a direct substitute’, or ‘This is a legacy company’, but if you’re asked about the market, you need to show that you’re aware of the market and the market is it’s players.

Lastly, revise your positioning story based on your findings. If your research reveals that other firms actually do what you’re doing, and worse, create a juicy ‘strong competition slide’  to highlight your advantages (see here). And if you have no actual direct competitors, ask yourself why that is. Be sure to:

👛 Prove the market: Is there a big enough audience to be addressed? If not, then expand your addressable audience or rethink your use case.

💅🏻 Validate willingness to pay: Have your customer actually pay for your solution. If they won’t, then find out what will actually motivate them to do so. 

If your company really is first to a large market, make it clear. Justify why you are first. Tell investors how you plan to keep others out. What is your moat? Describe the existing substitute solutions. Then spend time showing how you will sustain your advantage.