🤝 This week’s edition is sponsored by Orange Planet

Ever wished you had a partner who could back you from your very first idea all the way to a serious global raise? That's what Smilegate's startup ecosystem does. Orange Planet, its startup foundation, has grown 480+ startups in AI, SaaS, and healthcare since 2014, with hubs across Korea and an all-stage program for founders at every stage.

Smilegate investment (SGI), its venture arm, has backed 680+ portfolio companies, including unicorns like Fadu and Moloco, since 1999, and opened a US office in 2025 to work more closely with cross-border, early-stage founders. Between the two, there is support whether you need mentorship or capital.

📰 Today's topic: You Can Invest In Two Competitors At Once. But Should You?

We recently were asked a question that comes up a lot with newer investors in our network: what happens if you’ve already backed a startup, and then a newer, potentially stronger competitor emerges in the same sector? Conventional VC wisdom says you need to stick with your original investment, but for angel investors there’s actually quite a bit of nuance to this situation.

Why VCs pick sides (and why angel investors don’t always need to)

Most VCs make concentrated bets on one business in a category on the belief that it’s going to “win” that market and produce outsized returns. Hedging that bet by spreading capital around to competitors would significantly impact their ROI potential. This is antithetical to VC economics.

Further, these VCs who bet big on a company typically sit on its board and advise the business on how to operate and even have power over the CEO’s job! If that VC were to also back a direct competitor, it would create a serious conflict of interest.

However, angel investors carry none of that obligation. With a $5,000 check, you’re likely not voting on strategy, sitting on planning calls, or shaping either company’s direction in any way. You probably don't even get access to the Board meeting notes.

It’s kind of like owning both Coca-Cola and Pepsi stock in a brokerage account. It wouldn’t raise eyebrows because a retail shareholder isn’t in either boardroom making decisions. They’re simply diversifying their portfolio in hopes that at least one of the companies overperforms. With a $5,000 check, angel investors can afford to spread their bets around and chase upside.

Where the real risk shows up

For angel investors, the “risk” of betting on multiple competitors shows up in intros and at events. Things have the potential to get awkward quickly.

Remember that founders lean on their investors for warm intros. But you can’t send the same connection to two direct competitors. It’s not unethical, per se, but it is uncomfortable for all parties involved.

Events carry a similar risk. Two competing founders realizing they're both on your cap table can turn into an awkward hallway moment at a meetup or demo day.

Gut checking competitive investments

All that said, a strong deal in a space you already know shouldn't get an automatic no for competitive purposes. Before passing, ask yourself if you actually have influence over either company's decisions, since most angels writing $5,000 checks don't. Then think about whether your intros are likely to overlap between the two, something you can plan for ahead of time. The quieter question is whether you'd feel comfortable if these two founders eventually crossed paths, and if the answer is yes, the deal deserves a real look.

What you can't plan for

There’s another scenario that’s less common but also harder to see coming: A founder already in your portfolio pivots into a space where you've backed someone else.

That kind of conflict only shows up after you've already committed to both companies. All you can really do is handle the relationships with more care once it happens. Self-disclosing to the pivoting founder that you’ve already backed another company in this space can also help you get out in front of some awkward conversations later.

Overall, board seats create real conflicts that angels writing small checks mostly don't have to deal with, and that's worth keeping in mind the next time a great deal turns up in a category you've already invested in.

– Brian from Angel Squad

🍫 A snack for the road: Applications are open for Cohort 7 of Hustle Fund’s Venture Fellowship

Hustle Fund's Venture Fellowship apps are open, exclusively for Angel Squad members. It's built for aspiring fund managers, emerging VCs, angels looking to level up, and anyone exploring a career in venture.

Fellows have gone on to start funds and syndicates, pivot into VC, and get sharper as angels.

Cohort runs Oct 12 to Dec 4, 3-4 hrs a week, and fellows work live pipeline deals with our investment team.

Overheard in SF…probably

“We're default alive if you back out payroll, rent, and the AWS bill.”