At Hustle Fund, we see about a thousand pitches every month.

That's a lot of founders with big dreams and bold ideas. Many of them fit our basic criteria: pre-seed, pre-revenue, software companies (typically B2B).

So how do we decide where to place our bets?

While we consider numerous factors, there's one element that weighs heavily in our decision-making: competition.

And not in the way you might think.

Highly competitive markets are often the most challenging places to build a breakout success, especially at the earliest stages.

Competition creates a double bind for founders that few discuss openly.

First, your cost of customer acquisition inevitably increases. Think about it - when ten companies offer similar solutions, potential customers spend more time deliberating. Your ads compete with rivals, driving up prices. Your sales team needs longer to convince prospects that you're the one to choose.

Just by definition, your path to winning customers becomes more expensive when competitors are targeting the same audience.

The second challenge is equally daunting: it becomes substantially harder to raise funding in crowded markets.

Most investors avoid backing multiple companies competing in the same space – it's bad business practice and frustrates their portfolio companies. In a red-hot market where every investor already has "a horse in the race," many will be conflicted out of investing in your next round.

So you face a brutal catch-22: your acquisition costs rise just as your funding options shrink.

And you'll likely need more capital precisely because acquiring customers has become more expensive. Not an enviable position.

The Upside of Competitive Markets… Yes, There Is One

Now, this isn't to say you can't build a successful company in a competitive space.

After all, markets become competitive for a reason – there's usually money to be made there! If there weren't, smart founders wouldn't be flocking to the opportunity.

The challenge isn't that competitive markets are inherently "bad." The issue is that growth tends to be slower because:

1. You can't afford to spend as aggressively on acquisition
2. You can't raise as much capital to fuel that spending
3. Your customers take longer to decide or cost more to convert

This typically means relying more heavily on earned media and organic growth – perfectly viable strategies, but ones that generally extend your timeline to scale.

The silver lining? If you persist in a competitive space and gradually gain traction, you may end up owning a significant slice of your destiny. Since you likely raised less VC funding along the way, you'll retain more ownership and control of your business.

Just understand what you're signing up for. Competitive spaces aren't necessarily bad business opportunities – they just come with a different set of challenges and timelines.

The Surfing Approach to Market Timing

So if competitive markets present these obstacles, what kinds of opportunities do we actively seek at Hustle Fund?

I like to think of investing as similar to surfing.

You don't want to paddle out too early, exhausting yourself before the wave forms.

You don't want to be too late, missing the power of the swell entirely.

And sometimes, what looks like the perfect wave simply fizzles out, leaving you treading water and searching for the next opportunity.

This surfing analogy perfectly captures our investment philosophy.

We're looking for markets that may appear small today – perhaps so small that most investors are overlooking them entirely – but that we believe could grow substantially over the next five years.

These opportunities typically have minimal competition precisely because they haven't yet been recognized as significant markets. They're the waves that most surfers aren't even watching.

Finding these opportunities isn't easy. Sometimes what we believe will become a substantial market never materializes. People have been talking about the drone market since around 2014, but it's only now beginning to show real commercial promise. Many smaller "waves" in between simply never turned into the swells we anticipated.

But when you catch the right wave at the right time? That's where truly exceptional returns happen.

Riding the Wave: Real-World Examples

Let me share two examples from our portfolio that illustrate this surfing strategy in action.

CertifyOS: Catching the Telehealth Transformation

When we invested in CertifyOS, telehealth was just emerging as a necessity during the pandemic.

No one knew if virtual healthcare would remain relevant once people could return to in-person visits. It was an open question.

CertifyOS identified a specific problem: how to manage credentialing for healthcare providers across all 50 states. Previously, this wasn't a significant issue because most practitioners worked in a single state at their local office.

But telehealth changed everything. Suddenly, providers needed licensing across multiple states to serve patients remotely.

As telehealth evolved from pandemic necessity to permanent fixture in our healthcare system, CertifyOS rode that wave to impressive growth. They caught a market transition at precisely the right moment.

Sydecar: The Democratization of Venture Capital

Another example is Sydecar, which offers programmatic fund vehicles – essentially enabling special purpose vehicles for startup investing or even creating VC funds themselves.

Ten years ago, venture capital was a tiny, exclusive industry. Today, it seems everyone is launching a fund or pooling capital to invest in startups.

When we invested, this transformation was just beginning. There were more VCs appearing than before, but the real explosion in fund creation and SPVs was still ahead.

As the startup investment wave has continued to swell, with more individuals entering the space either as solo GPs or by pooling capital from their networks, Sidecar has ridden this wave successfully.

What's notable in both cases is that neither company entered already-crowded markets. Instead, they positioned themselves at the early stages of emerging trends that later grew substantially.

How to Spot Your Wave

As you build your business or consider startup investments, how can you apply this surfing strategy?

The key is identifying trends that haven't fully materialized yet but show potential to become significant in the coming years.

One approach I've found effective: look at what trends have ballooned in the past year or so, then examine adjacent spaces that might swell into new waves over the next five years.

For example, if AI assistants are today's big trend, what supporting infrastructure, tools, or complementary services might become essential as that market matures?

Or if remote work has transformed how we collaborate, what second-order effects might create new market opportunities as distributed teams become the norm?

The most promising opportunities often emerge not from the obvious trends themselves, but from the ripple effects those trends create in adjacent spaces.

But that's precisely why the rewards can be so substantial. When you position yourself ahead of competition rather than in the midst of it, you give yourself room to establish your offering, refine your approach, and build meaningful relationships with early adopters.

Applying the Surfing Strategy to Your Venture

Whether you're a founder or investor, here's how to implement this approach:

1. Study emerging trends with a critical eye. Look beyond the hype to understand the fundamental shifts occurring in technology, behavior, or business models.
2. Think in terms of waves and ripples. For every major trend, identify the secondary and tertiary opportunities it might create.
3. Be willing to enter small markets. The best opportunities often start as seemingly niche solutions that expand as the market evolves.
4. Develop patience. Building in emerging markets takes time. You're not just capturing existing demand; you're helping create it.
5. Stay adaptable. As the market develops, be ready to adjust your approach based on what you learn.

The surfing strategy isn't about avoiding competition forever. Eventually, if you've caught a real wave, others will notice and paddle out to join you. But by then, you'll have established momentum, relationships, and insights that latecomers lack.

This approach won't eliminate all challenges. Some waves you catch will indeed fizzle out. But when you do catch that perfect swell – positioning yourself in a market just as it begins its growth trajectory – you'll experience the rare combination of reduced competition, lower acquisition costs, and tremendous growth potential.

And that, for both founders and investors, is where the magic happens.