When your competitor has raised $8M in funding and you barely have $50k you get the feeling that it is not a fair competition. (And it can not be fair, no matter what you say...). But when your product gets better reviews, you suddenly become more optimistic.;)
And being more optimistic is the scary part especially when you don't have enough money. I wouldn't care much about how much money the guerilla's have got.
Have been through both positive and negative end result on two different products.
On a ecommerce product discovery site ReviewGist.com - we had a technically superior product, reviewed on TC and host of other big tech/startup blogs. But sustenance, financial muscle to extend reach matters a lot. Other VC funded companies marched past us long ago.
On a facebook book reading community "Books iRead/weread.com" we were new, small and of course used no budget. We bet the biggies in the market like goodreads, shelfari, librarythings who were there for long time on internet and well funded.
When it is consumer oriented business there can be wonders. But it is definitely a big red alert to watch for the biggie constantly. You get lucky if they don't do things right.
