I want to start a company, but see another player in the space doing what I want to do. How do I determine the level of competition they'll be? I have an idea for a company, but after doing some market research found that there is already another website doing the same thing. Think about if I was starting Lyft and I found out that Uber had been in business for 2 years, but didn't have many customers in my region of the United States. How would I know if I'll end up doing well (like Lyft did), or if I'll end up being crushed by the competitor. And what do investors say if they know there is already another company doing the same thing?

I've started several online companies where we have been first to market, but there have been marginally similar services out there....

A good investor will probably want to know there is someone else in the space, as if no-one else has thought of the idea, it *might* not be a good idea. Use this to your advantage. First off, it's proof of concept. Secondly, you can study where you think their downfalls are or what they are not doing well, and make that part better. Thirdly, look at which portion of the market they aren't serving, and target that. There may be enough customers to share, or they may end up acquiring you or vice versa. This will also show investors that an exit plan is feasible.
In answer to your question about the level of competition, you can probably only estimate. Do some research about the amount of customers they seem to have and what the average spend per customer is. You might find some of this data (or assumptions) in trade press or hire a Virtual Assistant to pool research for you. Think of it not just as determining competition, but as validating your market, which in turn shows investors you're realistic and well-informed. Furthermore, look at some horizontals and verticals in the space. For instance, when I started our Video Chat for Actors website,, although there was nothing like it, I could pool data from Auditions sites, Actors Unions, and IMDb to work out how many potential customers there were, and what they are generally spending on similar services, so as to get an educated assumption. Best of luck!

Answered 3 years ago

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