Perhaps the most touchy subject for both founders and investors is the competition slide. Founders often over-estimate their startup’s value and downplay their competitors in the market. Worse, some founders claim they don’t have competition at all.

As a founder, it’s important to have confidence in the solution being offered in order to thrive in a competitive market. And understandably, most founders attempt to downplay competitors to woo investors and secure funding.

However, investors take this move as a bit of a red flag.

Every business has a competition. No matter how unique or innovative the product may be.

The car competed with the horse and buggy.

Uber competes with taxis.

TikTok competes with Instagram.

You get the idea.

The bottom line is that competitors are the reality of a successful business.

A product with no competition is a sign to investors that there is no market or demand for the solution being offered.

It is also an indication that the founder likely hasn’t done enough homework. Worse, investors may think that the founder isn’t equipped to navigate the market at all.

So, what are investor expectations on the competitive slide? We quantified opinions from credible resources to answer this question.

Due to the length of our findings, we split this report into two parts: content and design.

STORY’s study of 237 opinions from 25 credible resources

We conducted an online search for credible articles on the competition slide. SEO-heavy articles and spam posts were omitted to ensure the quality of opinions. A background check was also conducted and author credentials were as follows: investors (18), entrepreneurs (1), consultants (4), and startup publications (2).

After careful content analysis, a total of 237 opinions were found from 25 online resources. Due to the high volume of opinions, we bucketed these into six main categories:

• Honest landscape - 41%
• In-depth research - 31%
• Realistic expectations - 10%
• Customer POV - 8%
• Benefit-focused - 6%
• Strategic Advantage - 4%

Let’s dive deeper into the data.

#1 Honest Landscape - 41%

The competitive slide’s primary role is to provide investors with a clear overview of the startup’s market. According to venture capitalist, Priya Mohan, there are two types of investors who view competitive slides:

1. An investor who is looking for a founder’s insights to see how much they know their market.
2. An investor who is looking to quickly educate themselves to see if the opportunity is worth investing in.
   

Investors want a realistic overview of the market. Some questions to consider are the following:

1. Who are the key players – both big and established and small and innovative?
2. What are the competitors’ and startup's strengths and gaps?
3. What are the current alternatives to the startup’s solution?
4. What is the startup’s strategy to enter or grow within the market?
   

Investors in our study stressed the importance of being honest when creating this slide. It’s a common practice to position the startup favorably and investors claim they automatically assume that this is false.

Venture capitalist, Hunter Walk, says:

"Whether you’re building a spaceship or a shoe. If you show me a competitive 2×2, I’m going to ask you what the competitors on the slide would say about it if they were critiquing the matrix categories and their placement."

To investors, underestimating a competitor is an indication that the founder hasn’t done their homework and this will greatly affect the discussion during the pitch.

Investors also wanted founders to consider indirect competition. They advised founders to keep tabs on companies who cater to the same target market.

Venture capitalist, Yair Reem, explains:

“While it is human nature to focus on immediate danger from our direct competitors, in most cases it is the indirect competition that will eventually run you out of business. In that case, these indirect competitors might one day build a similar product to yours, and take away your market share.”

This recommendation received 41% of mentions making it the primary priority of our the resources we analyzed. We believe most are interested in seeing the key players in the market and where the startup positions itself realistically.

By realistic, we mean that founders need to be ready to have an honest and in-depth conversation about their strengths and gaps as well as their competitors.

“It reveals how founders think in terms of market opportunities, competitive advantage, and business defensibility. It is a good measure of their business maturity and strategic thinking, all condensed in one slide.  I’ve seen many competition slides that look all alike and tell me nothing of value.”

Cristian Munteanu, Managing Parnter at Early Game Ventures

“It starts with this idea so many founders start off with this premise that they actually don’t have any competitors. And then the general response to that is, ‘then you have no market.’ I think people are afraid of bringing up competitors from the perspective that it somehow diminishes their business, as opposed to giving it credit. They need to be thinking about competitors as validating a market.”

Wayne Embree, EVP at Rev1 Ventures

Front 2016 Series-A Pitch Deck

The example above is not shy in listing both direct and indirect competitors. Though Front sits favorably in the landscape, the slide perfectly categorizes each company within the industry’s space.

#2 In-depth research - 31%

Research breathes credibility into pitch decks. It’s a recurring theme in most of our reports. Investors find this as the necessary first step in creating your competition slide. Without it, founders wouldn’t be able to give investors a realistic overview of the market.

Research helps equip founders during the pitch to answer necessary questions from investors. The competition slide will serve as a conversation starter to help investors gauge if the founder is truly well-versed in their industry.

Investors advised founders to know everything that needs to be known about their competition. This is simply not limited to features and benefits. Investors firmly believed that founders need to know their business model, pricing, and funding history.

Why?

Wayne Embree of Rev1 Venture recalls:

“It happens more often than people think. And in some cases, they’ll go so far as to skip over their research on the venture firm, and so fail to learn that the venture firm they’re meeting with has actually funded their biggest competitor.”

Yikes! We got nauseous reading that one.

In-depth research is the second most mentioned recommendation from our resources with 31% of mentions. It’s a testament to how crucial it is in the process of making the competitive slide.

Investors also mention that competitive research comes in handy during business development. It helps startups navigate their market strategically by being aware of the competition’s strengths and weaknesses.

“Understanding the competition isn’t only important for fundraising of course. Investors care for a reason. Founders who don’t understand the competition risk being out-sold, out-hired, making poor product decisions, and coming second (or worse) in the fundraising game. Any one of these risks can prove fatal.”

Nic Brisbourne, Managing Partner at Forward Partners

“Solid, up-to-date research and industry knowledge creates opportunities to answer investor questions with confidence, demonstrating your grasp of the industry, technology or domain which you are operating.”

Hugh Bickerstaff, VC at Investible

Metacert 2016 Seed Pitch Deck

The competition slide from Metacert is a straightforward yet strategic view of a crowded landscape.

#3 Realistic expectations - 10%

We’ve mentioned briefly that the competitive slide can easily be manipulated. Here, we’ll explain this in-depth in this section.

The competitive slide is what investors call a “make or break” slide. Investors mention that they always encounter competitive slides where the startup is positioned unreasonably well.

It’s a brow-raising occurrence for investors during pitch presentations. They believe the founder may not be aware of their market, or that they are being dishonest. Investors advised against choosing irrelevant points of comparison.

By irrelevant, they mean it is not a driving force for the target market to switch from their current alternatives.

According to investors, there is much to consider in the startup’s competitor analysis. More than just features and benefits, founders also need to consider the status quo. What are the current trends that drive the target market to purchase?

This category received 10% of mentions in our study. An evident drop in mentions indicate that investors and consultants feel strongly about honesty and research. While realistic expectations may appear as a secondary priority according to the data, it works in synergy with the first two points.  

“The real competition is — and always will be — the status quo. Every entrepreneur who tries to expertly map their competition is making a fundamental mistake about why people use products. People don’t wake up in the mornings and think: “I want to buy a new product today.” They wake up and start triaging each problem as it arrives, one-by-one, until they go to bed.”

Aaron Dinin, Entrepreneur and Duke University Professor

“There is another possible perspective to look at the competition: Do you know who your biggest competitor is? Even if you’re the first mover in a market and there is still no second mover, you have that one, big villain: The Status Quo. Never forget how hard it is to convince humans to change their behaviours and to try something new. Your biggest enemy is The Status Quo – how your target groups are satisfying their needs today.”

Iskender Dirik, Managing Director at Samsung Next Ventures

“There is a thin line between showing confidence in the comparative value proposition of your solution and presenting the whole competitive benchmark in a self-serving manner. Just spending time picking the right competitors and demonstrating clarity on each of their value propositions can be a good testimony that you know your space well.”

Priya Mohan, VC at Venture Highway

Almanac 2020 Seed Pitch Deck

This Almanac competition slide is more about the status quo vs. the competition. However, it orients investors on the current alternative and why their service is more efficient.

#4 Customer POV - 8%

Part of considering the status quo is understanding consumer behavior deeply. The consumer’s point of view helps founders choose points of comparisons that are accurate and relevant.

In order to come up with relevant points of comparison, founders need to understand what value means to consumers.

At the end of the day, businesses exist to solve a problem. Knowing the pain points and spending habits of the target market will help founders truly understand their competitors’ strengths and weaknesses.

Through our research, we’ve discovered that this recommendation is mostly mentioned by investors (67%) vs consultants and entrepreneurs (33%). Hence, it fell into 4th place with only 8% of mentions in our study.

Despite having significantly lower mentions, it’s a valuable insight that should be considered nonetheless. Why? It helps founders appeal to investors and demonstrate knowledge of how a market is shaped by end-user and customer needs.

“But even if you’re the best on your slide use this as an opportunity to really talk openly about what you believe customers want and why you believe your positioning will help you succeed in the long run. You will be able to say why you’ve chosen to be strong in certain areas — these being the ones you believe your target customers care about the most — and how you will develop other features to match competition in the future.”

Mark Suster, VC at Upfront Ventures

“The second step is to talk with customers. Armed with a thorough knowledge of your competitors features and products interview customers to understand their pain points… This will give you important context for assessing the relevance of their answers to your questions about competitors and which products and features they value.”

Nic Brisbourne, Managing Partner at Forward Partners

Revolut 2015 Seed Pitch Deck

Revolut’s competition slide may be a little crowded, but it does a solid job in demonstrating the competitive landscape while considering the benefits that solves the target market’s pain points.

#5 Benefit-focused - 6%

More isn’t always better — even if a startup offers more features than the competition, this doesn’t automatically make them better.

When talking about competitive advantage, there are other driving forces at play that needs to be considered. A few examples of this are customer service, distribution model, user experience, pricing, and more.

Investors mention that competitive slides shouldn’t focus on features alone. It has to focus on the benefit and the value that the solution offers.

Yes, customers consider features when purchasing a product. But to investors, using this as a basis to make competitive comparisons offer a shallow view on the market landscape.

A small number of investors (6%) mentioned this recommendation. We believe that it’s on the lower end of the scale because it’s not a focal point in the conversation surrounding the competition slide. Investors are interested in the overall competitive landscape and what the startup has to offer to dominate it.

However, keeping it focused on benefits ensures that a startup is addressing the problems within a market. In particular, they might be even tackling a bigger, newer, or deeper problem than its competitors. Product features solve problems, and therein lies the benefit.

“As startup founders, we often explain how our competitors do not have the differentiating feature that we have made. Competitive landscape slide has often proved to be a deal breaker. Investors have founders floundering over this question — What if your well-funded competitor adds this feature tomorrow? Avoid portraying single/bunch of features as your core proposition.”

AlphaValley, Startup publication

“A feature is not a sustainable differentiator. With some money and resources, every competitor could replicate your oh-so-great features. Comparing by features could be the right thing to pitch to customers, but as VC I want to know what your sustainable key differentiators are. Technology, positioning, brand, a unique Go-To-Market strategy, team, etc. could be sustainable differentiators.”

Iskender Dirik, Managing Director at Samsung Next Ventures

“In each row, you should include the key benefits (not features) that show the most compelling benefits that your target customers care about. Remember, benefits are the better outcomes or results people get when they use your product. Features are the parts of your product that enable its benefits.”

Dreamit VC

Castle 2015 Seed Pitch Deck

Above is Castle’s competition slide which highlights the weak points of traditional property management companies. It also considers indirect competition which could potentially expand and take their market share.

#6 Strategic advantage - 4%

Surprisingly, strategic advantage is not the focal point of the conversation surrounding the competitive slide. While founders are obsessed in making sure the competitive slide shows this, it only received 4% of mentions in our study.

We’ve come up with three reasons why this may be the case:

1. As mentioned earlier, startups can easily manipulate the competition slide to paint them in a positive light.
2. It’s a secondary priority to investors as they are more interested to see the overview of the market and where the startup stands in this landscape.
3. Founders have the rest of the pitch deck to flesh out what their strategic advantage is.
   

Yes, startups always need an advantage to woo investors into funding them. However, the competitive slide may not be the place to explicitly discuss this.

The competitive slide is a conversation starter where investors gauge the founders’ knowledge on key players in the market. Founders may subtly indicate that they are capable of grabbing a significant market share.

However, investors suggest that founders say “this is where are competitors are excelling, and this is what we’re going to do to overtake them,” instead of claiming, “we’re the best of the best.”

“‘Yes, we actually do everything!  And our competitors are overlooking something obvious.' Really? That doesn’t even pass the sniff test.  Forget whether or not it may even be true, you’re suggesting to potential investors that your competitors are just blind to opportunity that you discovered? That they haven’t invested in and tried many of those things. You’re also conveying to an extent, that you don’t need their investment – ‘we already do everything.’”

Paul O'Brien, CEO at Mediatech Ventures

“So I recommend pointing out the positive things your competitors do and giving an honest sense of where you differentiate. ‘Our competitor has been in the market for 6 years, which clearly gives them an advantage in terms of features and a large installed base. Where we hope to continue to differentiate with customers is in the simplicity of our design. Because our product wasn’t built 6 years ago we were able to take advantage of many of the Ajax-based toolsets that are newer on the market and thus have a more intuitive design. Had we been around 6 years ago we would have built more of a legacy system and, of course, once you have a large installed base it’s much harder to change your product.’”

Mark Suster, VC at Upfront Ventures

Vettery Series-B 2016 Pitch Deck

This competition slide from Vettery simply illustrates the landscape and the relative price points of each company within the space.

The competitive slide should be about the landscape and less about the startup.

Our research revealed that founders should not treat the competitive slide as a billboard to say “we’re the best of the best.” Rather, investors recommend to provide a realistic and accurate overview of the market. The startup’s strategic advantage only comes secondary to this.

The six recommendation categories found in the study are:

• Honest landscape - 41%
• In-depth research - 31%
• Realistic expectations - 10%
• Customer POV - 8%
• Benefit-focused - 6%
• Strategic Advantage - 4%
  

The key takeaway?

Be honest and be well-informed. The competitive slide is a visual to show who the key players are and what are the areas they excel in. It’s best for founders to start an earnest conversation with investors: why does the startup focus on a particular benefit vs the competitors? Here, founders can show their in-depth knowledge in the market and they can win plus points for being honest and self-aware.