Benchmark Says Venture Pact Against Backing Rivals Is Eroding

Benchmark, a long‑standing Silicon Valley venture‑capital firm, warned that the informal agreement among investors to avoid funding direct competitors is weakening. The firm noted that the pressure to back promising startups is increasingly outweighing the traditional courtesy of not backing a rival’s portfolio company.

According to Benchmark, the shift reflects a broader change in the venture ecosystem, where capital scarcity and heightened competition for high‑growth opportunities are prompting firms to reconsider long‑held norms. The firm’s observation suggests that investors are more willing to cross perceived boundaries to secure a stake in emerging technologies.

The trend could reshape how venture capital firms evaluate deals and manage relationships with peers. If the unwritten rule continues to erode, it may lead to more overlapping investments and alter the collaborative dynamics that have historically characterized the Valley’s funding landscape.

Why It Matters

U.S. and European startups could see more aggressive funding battles, affecting deal terms and partnership strategies across the Atlantic.