We try our very best to avoid it up front. If we think a startup will compete directly with an existing investment we generally avoid it and we also will talk to the founders of the existing portfolio company and the other company as well to get their read on the situations.
We avoid competing investments for several reasons:
-we feel a tremendous about of loyalty and pride in our portfolio companies
-we are involved in our companies, usually join the board of directors at the company
-avoiding competing investments also requires us to internally have the conviction to make the investment in the one company we believe will be the winner in their market
Sometimes, startups will evolve over time and change direction completely and may end up competing with another portfolio company. Of course, that is impossible to predict up front though.
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