To Niche or Not Too Niche?

Recently on LinkedIn I saw a post about advice for business founders to start niche businesses. The reasoning was, a non-niche business will always face major competition from larger players, while a niche business can grow quietly undisturbed. To which my response was:

There’s definitely opportunity in markets that are too small for VC, but plenty big for SMBs to do very well playing in. And without competitors getting VC funded, there might be better vendor sustainability.

I’m not sure it’s an overall easier path though — going after a niche market, you’ll be forced into the slower growth way of scaling because early stage investment is unlikely and it being harder to find customers. And may also lack opportunities for a strategic acquisition due to a lesser TAM and visibility.

Overall niche vs non-niche. I’m ambivalent on which is better. Niche is fantastic if you get in early and your industry really grows (Coinbase) but it’s got some notable downsides I mentioned above, too.

We ended up agreeing that niche and non-niche startups are both challenging.