No Competition Is the Worst
A red flag in any pitch deck is the claim that a business has no competition. If you see it, one of three things is true:
The market stinks: Nobody bothers competing because there’s no money to be made.
They’re delusional: Founders stopped channel-checking and aren’t aware others are eating their lunch.
They’re “forgetting” someone: Scarcity boosts valuation, so sometimes people hope you’ll trust but won’t verify.
This came up the other day when I reviewed a CIM from a niche manufacturer boasting “no direct rivals.” My Google-fu – heightened by cynicism – took just a few minutes to uncover a direct competitor across town founded by a team that had absconded from the company that was for sale in the market.
Wait, what?
There are only a few reasons why that might happen, and none of them are good for a prospective buyer.
The point is that competition is everywhere. Even the status quo is competition. But also you should want to compete. So if you’re telling people you have no competition, you’re either wrong, crazy, or lying – none of which are things you want to be.
– Tim
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