Who in the world are you talking to that is telling you this? Longer reach does not mean that you will lose because of it. Especially in competition since you can find a weight class that suits you.
If you are talking purely self defense, I doubt some random guy that picks a fight will know how to properly use his reach anyway.
Its not everything. I mean hell Frankie Edgar is smaller than some 145ers and is still top 5 at 155. Roy Nelson KO'd Struve, Couture dropped Sylvia. Reach isn't everything and if you take up grappling instead of what you really want to do, you will more than likely not get as much out of it.
Dustin Poirier - Michelle Waterson - Frankie Edgar - Diaz Bro's - Claudia Gadelha - Demian Maia - Jessica Eye
Miesha Tate - Urijah Faber - Chuck Liddell - Georges St. Pierre