Investors recognize that most concepts will have direct or indirect competition. In many cases, there will be a few other startups or established companies planning ventures that are fairly similar to what is being presented by a team.
Investors prefer honest answers, and the comfort of knowing that the team has indeed evaluated the competition and have some thoughts around how they intend to be one up in the game.
In some cases even a honest answer saying “Well, they are pretty similar to what we are doing. However, there is room for more than a few payers and we are glad that we do not have to create the market all on our own. We do however see us having a significant edge over them in the quality of the team.”.
What investors are not comfortable with are boastful claims with little substance to back it. We have often heard many entrepreneurs say “Oh, their product is just not as good as ours”. One should remember that while having a great product is certainly an advantage, having a better product is not necessarily a guarantee of success or leadership.