VCs like to see that a startup has competition. The standard reason given is that the presence of competition validates that a market exists. This is true, but competition is a key signal of a market's maturity, not only its size. Your product might solve a huge problem for a large market, but if your customers have never seen anything like it, you are going to have to spend tremendous amounts of money educating the market.
Netflix recently provided a great example of this. On last week's earnings call, Netflix CFO David Wells blamed a lack of competition for their sluggish growth in Latin America. From GigaOm: "Without other companies showing local consumers that “streaming video actually works,” Netflix endures the entire burden of marketing an consumer education [sic]."