A number of early stage presentations I’ve seen personally or read about lately have included companies reinventing a concept that is currently in the market and may have already succeeded or failed.  This problem is particularly acute with respect to apps.   Perhaps there are a million already available, but no one knows how many tens of thousands more are teed up for release next month.  You can Google and search CrunchBase or Angel List all you wish, find nothing comparable to your idea, and then still be surprised as you watch someone else birth your baby.

Many times on first viewing these pitches look vaguely familiar to me, but it often takes some digging to recall where I’ve previously “seen this movie.”  I frequently get queries from investors asking if I recognize a particular company or idea, and I make similar queries to my network.  Everyone wants to show a slide where your company is in the upper right quadrant of your competitive matrix, but just getting a grasp on who belongs in the matrix is no longer easy.    

Identifying competitors involves not only finding the ones that have similar technology underpinnings and market targets but also recognizing potential threats from entirely different solutions that could substitute for your use case.   I can call you, send you an email, Tweet you, message you on Facebook, mail you a letter, text you, or connect with you via a host of other social services.   All of these can be applied to marketing, forming groups, self-promotion, sharing humor, keeping up with the family, etc.  

Putting any new deal in its real context is becoming an ever more difficult challenge.  Gone are the days when we had one or two readily identifiable enemies and could take some comfort in lengthy gestation periods for new foes.   Now it’s like the old game Space Invaders but played from all directions and in multiple dimensions.   So how in this context do you de-risk your investment in new idea?  Following are a few suggestions:

1.   Look for an entrepreneur with deep knowledge in highly focused area.   Commercializing university research where the investigator knows his or her field and who are the players is one example of this.   You may find a bona fide new technology that can solve a big problem, and you may get lucky with some patent filings to go along with that.

2.   As an investor, choose the areas where you can get comfortable with the market positioning of an idea.  If you develop your own deep domain knowledge in a finite number of sectors, that knowledge will serve you well.   If you read about all 10 newly funded deals in TechCrunch every day and try to figure out where they all fit, you own circuits will be overloaded, and you can’t hire enough analysts to cover all the bases.

3.  Don’t sit there; get on the road.  Go to pitch sessions, incubators, university licensing offices, investor gatherings, opinion leaders, and other sources of deal flow in the cities where big things are happening.   You can gain real perspective, get to know the people doing the deals and what they are thinking about next, and basically get some color behind all the funding announcements that flood your screen daily.   You may want to put your dollars to work close to home, which is fine, but you better have more than a passing acquaintance with the important deals that are getting done in the Valley and NYC, for example. 

4.   When you do find a direct competitor to a proposed project, run it to ground.  Find out what made it succeed or fail and make a judgment as to whether your entrepreneur can do it right this time around.  I’m seeing lots of deals based on ideas from a decade ago that weren’t necessarily bad but were clearly well ahead of their time.  Changes in technology are allowing some of these to be resurrected with a better outcome on the restart.  And, many a company has blown its launch strategy, suffered a painful death, and left a territory open for someone else with better marketing chops to jump into the vacuum.  

5.   You can make all the college football predictions you want, but every weekend there are plenty of surprises.   Yes, as the trite saying goes, that’s why they play the game.   You don’t necessarily have to find a completely unoccupied space to create a winning venture.   You may have a team that can aggressively attack a crowded market and produce a winner.  Many times your competitors have had time to make too many mistakes, are hamstrung by old technology with existing customers, or have grown complacent -- and they are vulnerable.  And their existence has paved the way for you by establishing price points, channels, and buying patterns.

Now I just hope I haven’t written this piece before…

<Wikipedia image from Space Invaders game>