Your 5 person AI startups still needs Series A money

The headcount efficiency trap that's fooling founders and investors

Author

Michael Morgenstern
June 03, 2025

Happy Tuesday Brex community,

Seedstrapped AI-native founders and investors, your lean team of 5 tastemakers crushing 90%+ gross margins is a weapon, but GTM is a capital-hungry beast. Bloated legacy SaaS rivals are flooding the market with massive budgets, stealing share while your $1M in engineering savings sits idle. Pour that cash into ferocious GTM plays. Track CAC payback like hawks to ensure every dollar compounds. Price on value delivered, like insights or automations, not usage, to dodge compute cost spikes that tank NDR. Test pricing fast with early customers to lock in scalable margins.

Scaling sales costs serious money, and capital rules GTM. Reinvest your lean savings to outmaneuver bigger players, turning efficiency into market dominance. VC is your sword! Use it to grab distribution and redefine the market. Without aggressive GTM, giants will bury you. How will you deploy capital to own the market?

I'd love to hear from you, whether you agree or disagree!

Growing together, Michael Morgenstern

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Ethan Austin is the founding partner of Outside VC

Ethan Austin is the founding partner of Outside VC, a pre-seed fintech and climate firm with the core belief that outsiders, not insiders, build the world's most iconic companies. The firm boasts an NPS of 97 from its portfolio founders and has the reputation of going to bat for its portfolio companies in a way that few firms do.

Prior to launching Outside VC, Ethan was a managing director at Techstars, launching the Techstars LA and Techstars Western Union accelerators. Before that, he was a longtime impact founder who helped pioneer crowdfunding in 2008 with the world's first medical crowdfunding platform, GiveForward, saving over 10,000 lives in the process before joining GoFundMe in 2017. Prior to starting GiveForward, he had gloriously failed the CA bar exam, gotten fired from multiple crappy jobs in high school, and folded at least 2500 pizza boxes throughout an illustrious pizza delivery career at BJ's Pizzeria. 

 

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Don’t hesitate to reach out,🦾!