There's a difference between being critical and being disrespectful or rude.

And the size of the market is irrelevant. To run with your analogy, the question is whether it is ethical to invite someone into your home to join a support group for small entrepreneurs and then fund a much larger team to chase their ideas once you learn about them. For an organization that aims to support entrepreneurs, this just looks bad. There is nothing wrong with competition, but they should have passed the proposal to someone else to fund.