What is competitive advantage?

What are examples of barriers to entry that an internet startup can posses or build to have a competitive advantage and attract investors?

• What are some good examples of barriers to entry that early stage internet/web startups can build or posses; besides the obvious ones: patents, first mover advantage, brand, and the team. Looking specifically at early stage companies which are either just started the startup or recently launched the product, and have not build enough of market share yet. It seems like now days anything can be replicated easily and cheaply (cloud, open source, etc), so in theory existing competitors or new startups could easily replicate your product/service etc. How can a startup stand out? Especially in the eyes of an investor, since a customer might have an easier time perceiving the value than the investor.

• Answer:

  Personally, I don't believe you need a structural barrier to entry to be interesting to investors.  You need a team and vision that let you out-innovate your competitors (I know you mention this in the question, but it should be reiterated.)  But, to answer the question, here are some: Intellectual property (whether a patent or a proprietary business method) Need to partner with platform provider (i.e. Twitter, Facebook, Apple) Regulatory environment (especially in fintech) Network effects (rather than first-mover advantage) Industry know-how (trite, but very true) Lower costs