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If a venture capital firm is currently funding a company in category X, are they allowed to fund another company in the category X who are direct competitors? Would the first company be able to sue this venture capital, etc?

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    What makes you believe that they would not be?
    – Trish
    Nov 8, 2023 at 8:23
  • Well, inherit conflict of interest? Nov 8, 2023 at 8:25
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    Why would they be in conflict? Two companies in the same industry can both succeed, especially if they're not that big.
    – Cadence
    Nov 8, 2023 at 9:40
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    Many venture capital firms specialize in certain areas, so this is actually quite common. Why do they specialize? Well, they think that they know the area pretty well and can judge proposals better.
    – Jon Custer
    Nov 8, 2023 at 13:48

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Yes, this is permitted and common. For example, see the portfolio of Andreessen Horowitz. It includes Facebook, Instagram (later acquired by Facebook), Pinterest, Skype, Slack, and hundreds more in various tech specializations. It also includes OpenAI (developer and host of ChatGPT) and character.ai (a chatbot service).

The portfolio of Kleiner Perkins includes SpaceX and SpinLaunch; Stripe and Plastiq (two payment processing companies).

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  • Those categories are pretty broad. By category, I am thinking more about Twitter vs Threads. Or ChatGPT vs some other chatbot. These examples are in direct competition. Nov 8, 2023 at 16:16

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