Founders worry too much about highly funded competitors. Usually funding matters less than the founders' ability. In the short term, a highly funded competitor can hurt you by e.g. lowering prices. But if you survive long enough, it will ultimately become a test of ability.

There have been cases where a highly funded startup used the money to kill off all its competitors. But not that many. And the highly funded startup often had the more able founders. There are few cases of highly funded mediocre founders beating underfunded great ones.

So in one sentence, the strategy for dealing with highly funded competitors is: survive long enough to make it a test of ability.

(This advice applies to more than startups.)