“Start-ups die of suicide, not murder.” It’s a common saying. It means that most start-ups fail because of self-inflicted wounds like bad decisions, not competition. This is true, but even so, it’s critical for early-stage founders to know the competition when pitching investors.
Investors backing founders at the spearhead of company formation want to back someone who understands a problem and the market for it better than anyone else. They expect the founder to have identified something others don’t see that will allow them to succeed. Part of this process should include understanding existing solutions and why they don’t adequately serve the market. That doesn’t mean you aim to mirror what your competitors have done. It does mean you know how your solution will create more value than competitors’.
If you’re an early-stage founder and you don’t know your competition or can’t speak to how your solution is superior, you’ve diminished your chances of getting capital from investors.