Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

Every deck hitting our inbox looks the same as the last.

Another personal healthcare solution powered by AI. Another team productivity app powered by AI. Another recruiting tool, sales tool, customer support platform... all powered by AI, of course.

The space is crowded. But we cannot just avoid crowded markets. Healthcare, productivity, HR, sales. These are billion and trillion dollar markets that will have multiple winners. So it is not a question of whether to invest in competitive spaces. It is a question of how to spot winners at the earliest stages, especially when all the decks start to blur together.

Here is how we tackle it at Hustle Fund.

Step 1: Look for Self-Awareness

We know the space is crowded. The founders know the space is crowded. So there is no use pretending otherwise.

That is why we look for founders who acknowledge the competition within the first few slides. It is not just about honesty (though that is important). It is self-awareness. And self-awareness shows that the founder knows what she is getting into.

A founder who fits this description is prioritizing customer acquisition from day one, coming up with ideas for acquiring customers at scale, obsessed with retention, and generating ideas to increase lifetime value.

Elizabeth Yin talks a lot about customer acquisition being the single biggest factor that prevents ideas from becoming big businesses. There is just so much noise now. Even if you do not have a direct competitor, there is always competition for mindshare. Tech is a commodity. Marketing is what separates winners from everyone else.

A founder who waves off competition with "nobody is doing exactly what we are doing" is either naive or has not done the research. Neither is a great sign.

Step 2: Look for the "Earned Secret"

This is my favorite filter when evaluating startups in crowded spaces.

Every founder needs to be able to answer one question: "What do you know about this market that others do not?"

And the answer needs to come from real experience, not just market research they pulled together over a weekend.

Take Canva. When Canva pitched design tools, they did not just say "design is big." They broke down every single step of the professional design process, assigned market values to each step, and showed exactly where they would focus and why they could win there. They used their earned secret to develop their go-to-market motion. And it obviously worked.

Maybe a founder has figured out why so many companies in this space have failed. Maybe they have identified a gap that everyone else missed. The key is that this insight is hard-earned and specific. That is what turns a me-too startup into a category winner.

Step 3: Look Beyond the Deck

A deck with 10 to 15 slides cannot tell the whole story. That is why we encourage investors to dig deeper on a few things.

Talk to customers. Not the hand-picked references the founder gives you. Find people who tried the product and stopped using it. Find people who evaluated it and chose a competitor. Those conversations tell you more about competitive positioning than any slide ever could.

Look at the team's background relative to the problem. A founder building in healthcare who spent ten years in hospital operations has a massive advantage over a founder who read a McKinsey report about healthcare inefficiency.

And pay attention to how the founder talks about competition. Do they dismiss competitors? That is a red flag. Do they deeply understand why each competitor exists and where each one falls short? That is someone who has done the work.

The Customer Acquisition Question

In crowded markets, the company that wins is rarely the one with the best product. It is the one that figures out how to acquire customers profitably while everyone else is burning cash.

Elizabeth Yin has pointed out that the biggest risk for most tech startups today is not technology risk but customer risk. Do people want to buy your product? Will they put money towards it?

Ask the founder: what is your customer acquisition cost right now, and what is your plan to bring it down? How does your approach differ from the 50 other companies targeting the same buyers? If the answer is "we will run Facebook ads and do content marketing," that is not differentiation. If the answer is "we have piloted with 200 hospital administrators because our founder ran one of those hospitals for a decade," now you have something.

Here is the counterintuitive thing: a crowded market is actually a strong signal. It means there is real demand. The worst situation for an investor is backing a company in a market where nobody else is building, because sometimes that means nobody wants the solution.

The trick is finding the startup that has a genuine edge in reaching and keeping customers. At Angel Squad, members learn to evaluate these competitive dynamics across the 1,000+ startups Hustle Fund reviews monthly. If sharpening that pattern recognition sounds useful, check it out at Angel Squad.

Crowded markets create winners. Your job is to find the one playing a different game.