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What they mean
Did you not actually check who the portfolio companies are the investors and that your direct competitor is a portfolio company?
Before you reach out to any invsetor you need to check:
- Their website for who they list as their portfolio (They don’t always update it fast)
- Crunchbase to see who is listed as investees (May be more up to daye)
- Google search for funding announcements (If you have the time, but I presume you have been tracking)
To be honest most investors will not take a meeting with startups if they know that they have invested in a competing company. Where there is a grey area, they will normally say upfront “look we invested in Facebook and there may be some conflict in your advertising plans. Are you still happy to chat with us or shall we end things now?”
In some sense, the investors are covering their ass/reputation.
Dodgy investors would not say this. They will brain rape you for information. So pick who you share information with.
What you need to say
“Yes David, we know that you’re invested in Facebook and we have seen that they have been expanding in advertising. The great thing is we are approaching things very differently to how they are. In fact, Facebook is a potential exit opportunity for us, and given the relationship that you have with Mark, this could work out very well for all of us.
Of course, we would want to manage conflict of interest, but there are ways around everything.
Do you want to proceed?”