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Is it risky to pitch an investor who's already invested in a more established potential competitor?

My venture is at a very early stage. We have paying customers but very little capacity to sell a lot and deploy in parallel for multiple customers. I'm looking for investors in order to scale, and I found an investment group that might be the perfect cultural fit for my venture. However, this group has already invested in (and shares some top officials with) another startup that is in a similar space with a similar vision, has a much larger team, and is growing rapidly. I am wary about revealing my already-profitable business plan with an investment group that is already adept at building a tech team that could replicate my work and scale it more rapidly. Am I being paranoid? If yes, and I should still approach them, how should I go about this?

8 Replies

Jonathan Levitt
3
0
Jonathan Levitt Advisor
Chief Marketing Officer at Reitmans Canada Ltd.
I'd say if you don't have anything proprietary then find another investor. There's plenty of money in the market. Not worth the risk in my opinion.
Brett Fox
3
0
Brett Fox Advisor
Respected, Results-Oriented CEO, Entrepreneur, Author, and Coach
Adam,

Here's the deal. The investor is not going to invest in your company because they have already placed their bet.

Most likely, your pitch deck will end up with your competitor. It shouldn't happen this way, but it regularly does from my experience.

My advice: Pass on the opportunity.
Jack Hembrough
0
0
Jack Hembrough Advisor
Member, Board of Advisors at Pwnie Express
Be clear. You are NOT paranoid. It is unethical for the investor to take the meeting. Brett's spot on. Run from this opportunity.
Jennifer Fortney
1
0
20+ years’ experience in PR & marketing comms; Founder of Cascade PR, Chicago firm for small business & startups.
I agree with the others. They won't invest in your company anyway - conflict of interest.


Vadim Oss
0
0
Vadim Oss Entrepreneur • Advisor
Co-founder at Rentini
Adam, due to conflict of interests they shouldn't and won't invest in your venture. There are plenty of others around. You never know who is your "cultural fit" until you get someone onboard who is really into your idea. Just pass on this one
John Lonergan
0
0
John Lonergan Advisor
Author: Antidote at Amazon
Don't do it.

They have three reasons for talking to you, all bad for you:
1) They'll refuse to sign an NDA--and will therefore be free to share data with others.
2) They'll poach your people.
3) They won't invest.
Oliver Roup
2
0
Oliver Roup Entrepreneur • Advisor
Founder / CEO at VigLink
The advice not to take the meeting is right. But you should understand that much of what you seek to protect can be obtained in other ways - posing as a customer, chatting up your salespeople, other investors who pass your deck along, etc. The only defense against this is velocity. Move fast enough that by the time they take you seriously, you can't easily be extinguished.
Aleh Veraskouski
0
0
Software Engineer at Cisco
If your goals is to get funded -- pass. Very few investors would invest in two competitive startups. You can check with their past investments though.

Also, be extremely aware of this particular competitor as he is likely to pull a lot of benefits (including funding) from your path going forward. You'd better have a strategy.
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