The big question is: does funding help? With funding you can hire more developers, but that may or may not help depending on what you're doing. Is your project capital heavy (ie. do you have to pay lots of money for servers and such)?
If you aren't going to be hiring more developers and your service doesn't require a lot of capital, then the funding advantage shouldn't be so daunting. For example, it's hard to go up against Flickr without funding because you'd have to buy a ton of storage (even if you're just paying for cloud storage, it'll be expensive when people use it). However, going up against Twitter wouldn't require such funding because the capital costs are low comparatively.
Now, clearly there are other barriers than funding, but if your business doesn't need a lot of capital to compete, don't worry about a competitor's funding advantage too much. If you're smarter/better/more awesome, you're funding your project with something even more valuable: your time.
If you aren't going to be hiring more developers and your service doesn't require a lot of capital, then the funding advantage shouldn't be so daunting. For example, it's hard to go up against Flickr without funding because you'd have to buy a ton of storage (even if you're just paying for cloud storage, it'll be expensive when people use it). However, going up against Twitter wouldn't require such funding because the capital costs are low comparatively.
Now, clearly there are other barriers than funding, but if your business doesn't need a lot of capital to compete, don't worry about a competitor's funding advantage too much. If you're smarter/better/more awesome, you're funding your project with something even more valuable: your time.