funding, business-modelI have an idea for what I think would be a good start-up company. In researching my idea I found another company that offers the same service. However, I feel I can do a much better job at creating this service and building customers than the existing company.
Is it realistic to be able to raise money for a startup when there already is a competitor doing the same thing?
Short answer: No.
The “But it’s already been done” it’s a fallacy. Just go to your local library and see how many books and magazine exist for the exact same topic. Some books resonate with you than others, and some other books resonate better to other people.
As a matter of fact, I think it’s quite the opposite. If I do market research and I find out that I’m the first-to-market I’d be worried. Why isn’t a product out there yet? Is there even a market for it? You might as well have a unicorn in your hands, maybe, or maybe there’s no market for your idea.
Anyways, don’t assume that you can do a better job at creating the exact same service.
Instead, reach out to your competitor’s existing customers and ask them if there’s anything about this service that frustrates them. Ask them if they’d wish this company offered another service? What problems are still unaddressed by this company? If you start noticing patterns on those answer, then address those things first, so you can differentiate and position yourself better. So you wouldn’t only be the company who does X, but also does Y and Z.
As far as raising money, that depends on the investors. But if you’re truly solving a burning pain for a fair share of the total addressable market, I don’t think you’re going to struggle to find someone who’ll back you up.
Many serial entrepreneurs and people that invest in start-ups won’t touch an idea with a ten foot pole if it’s completely unique.
If you can take an idea that’s already been proven to have a valuable customer-base, add a unique selling proposition (why would I choose YOU over THEM?) that fixes a common frustration with the competitors, and market it as well or better than they do, you just might have an idea worth pursuing.
The key is that the problem you’re fixing has to truly be a problem and you really have to fix it without creating any of your own problems (or at least not enough to counter-balance your improvements).
So you made it easier to use? Well, if the average customer didn’t think the competitor’s service was difficult to use, that may not be a great selling point - but if they’re constantly frustrated with the UI of the other service you might be on the money.
Here’s the thing though. If someone else is already making money doing what you want to do - YOU KNOW THERE IS MONEY TO BE MADE DOING IT!
If there is literally no one else out there doing it and your idea is truly unique, then you don’t know without much more extensive market testing whether the idea is actually valid or not.
A unique idea really might be that million dollar idea - but it’s not a sure thing. An idea that’s already been implemented but you’re SURE you can improve on in some meaningful way is the much safer bet.
As a general rule, it’s much easier to carve out a slice of an existing market than it is to build an entirely new market into existence.
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