If startups never entered markets with competition, we wouldn't have Google (Altavista was market leader), Lyft (Uber), Zoom (Microsoft/Skype) or countless other darlings that are now large publicly traded companies... It's more important to choose a market where you feel that you have a competitive advantage over incumbents. Could be tweak to their product that you believe adds additional value, could be the strength of your team and your ability to move more quickly, could be your go to market strategy; the key is finding something that separates your brand from others in the space and carves out a piece of the market where you can be successful. There is always room for innovation in any market, even those that are fairly saturated with competition. Find your competitive advantage and exploit it!