"No competition" is a red flag, not a strength. Here's how to think about it properly.
Every investor asks the same question: "Who else is doing this?" And almost every first-time founder gets the answer wrong. Either they say "there's no competition" — which tells investors the market doesn't exist or you haven't looked hard enough — or they list every tangentially related company in the world on a cluttered grid.
The honest, useful answer is somewhere in between.
Direct competitors are companies solving the same problem for the same customer in roughly the same way. Indirect competitors are the alternatives your customer currently uses instead — including doing nothing, using a spreadsheet, or hiring someone to do it manually. Both matter.
Knowing your indirect competition is often more valuable than knowing your direct competition, because it tells you what you're actually replacing in someone's life. If your target customer is managing invoices in Excel, Excel is your competitor. Understanding why Excel is painful for them is the key to your pitch.
Start with a Google search for your core use case, not your product category. See what comes up. Check Product Hunt for recently launched products in your space. Look at G2 or Capterra if you're B2B. Search LinkedIn for companies with similar positioning. Talk to potential customers and ask: "what do you use today to solve this problem?"
For each competitor, note: who their target customer is, roughly what they charge, what they're known for, and where people complain about them. Review sites like G2, Trustpilot, and the App Store are gold for understanding competitor weaknesses.
Once you know who's out there, you need a clear answer to: why do customers choose you over them? This should be specific. "We're faster" is not positioning. "We're the only tool built specifically for sole traders, not a scaled-down version of enterprise software" is positioning.
The classic 2x2 competitive matrix — where you plot competitors on two axes and magically end up in the top-right corner — is tired and nobody believes it. A better approach is a simple table showing five or six competitors and four or five key attributes, with honest tick/cross marks. Show where competitors are strong. Show where you win. Don't pretend you beat everyone on everything.
Saying you have no competitors. Including every company in a tangentially related market. Choosing arbitrary axes on a matrix that conveniently make you look best. And the worst one: not knowing what customers actually think of your competitors. If an investor has used one of your competitors and you can't speak to their experience, that's a problem.
A founder who can say: "Our main direct competitors are X and Y. Our customers currently use Z as a workaround. We win because [specific, honest reason]. We don't win on [attribute] yet, but here's why that doesn't matter for our target customer." That's a founder who knows their market.
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Try the funding finder →This is general information, not financial or legal advice. Always do your own research and seek independent professional advice.