Sarah had a problem that didn’t make sense.
Her B2B SaaS startup needed to validate whether enterprise buyers would actually pay for automated compliance reporting. The test itself was straightforward: build a working prototype, run it with five pilot customers for 60 days, and measure conversion intent. Three years ago, this would have cost £200,000 and taken six months. Today, using no-code tools, AI-assisted development, and a fractional product lead who’d done this exact playbook at three other companies, she could run the entire experiment for £35,000 in eight weeks.
But when she went to raise funding, every investor told her the same thing: “Come back when you have more traction.”
Here’s what made no sense: the cost of generating that traction had dropped by 85%, but the amount of capital investors expected her to raise had barely changed. She didn’t need £500,000 to learn if her idea worked. She needed £50,000 and the right execution partner. Yet the funding system was still built for a world where proving anything required massive upfront investment.
The Cost Compression Nobody’s Pricing In
Something fundamental has shifted in how startups get built, yet our financing models haven’t caught up.
Building software is 10x, maybe 100x, cheaper than it was five years ago. The combination of cloud infrastructure, AI-assisted coding, no-code platforms, and modular APIs means founders can ship products that would have required a full engineering team for months.
Consider two real examples:
Example 1: E-commerce Analytics Platform
2019 approach: Hire two full-stack engineers at £80k each, spend four months building custom data pipelines, analytics engine, and dashboard. Total cost before first customer: £160,000 in salaries alone, plus £40,000 in infrastructure and tools. Six months to market.
2026 approach: Use Retool for the dashboard, Fivetran for data pipelines, and Claude API for natural language queries. A single fractional technical founder working 15 hours per week for eight weeks, with AI pair programming. Total cost: £12,000. Eight weeks to market.
The reduction: 94% cheaper, 3x faster.
This isn’t about cutting corners. The 2026 version is often better — more maintainable, more secure, and easier to iterate. The difference is that all the hard infrastructure problems have been solved and packaged into reliable, cheap services.
Example 2: Testing a New Go-to-Market Channel
2019 approach: Hire a full-time growth marketer at £70k, give them three months to test content marketing, SEO, and paid acquisition. Budget £30k for ads and tools. Total: £47,500 for a 90-day experiment (£17.5k salary + £30k spend). High risk if the channel doesn’t work.
2026 approach: Bring in a fractional growth operator who’s run this exact playbook five times before. They work 20 hours per week for six weeks, using AI for content creation, automated testing tools, and lean attribution. Budget £8k for ads. Total: £14,000 for a 6-week experiment (£6k for expertise + £8k spend).
The reduction: 70% cheaper, 66% faster, and lower risk because you’re working with someone who’s done it before.
More importantly, you learn whether the channel works in six weeks instead of three months, which means you can test three different channels in the time it used to take to test one.
The Real Bottleneck Isn’t Capital Anymore
Here’s where it gets interesting. When you can build and test this cheaply, the constraint changes. The bottleneck is no longer “can we afford to try this?” It becomes “do we have someone who knows how to run this experiment properly?”
In the analytics platform example, the £12,000 cost isn’t the barrier. Finding the fractional technical founder who’s built data products before and knows which corners you can cut versus which will kill you later — that’s the constraint.
In the growth marketing example, the £14,000 budget is achievable for most founders. The hard part is accessing the operator who’s already run paid acquisition for B2B SaaS companies and won’t waste 60% of your budget learning the basics.
This is the profound shift: execution expertise has become more valuable than capital at the earliest stage. When testing costs £15,000 instead of £150,000, the question isn’t “can we afford this?” but “can we execute it well enough to learn something meaningful?”
The Financing Mismatch: We’re Stuck in 2015
Yet when founders go to raise capital, they’re met with a system designed for the old cost structure:
“We write £500k minimum checks.”
“You need 18 months of runway.”
“Come back when you have £50k MRR.”
These thresholds made sense when proving product-market fit required hiring a team, building for months, and burning through £300k before you knew if anyone would pay. They make no sense when you can validate your core hypothesis for £35,000 in eight weeks.
The result is a strange paradox: there’s more venture capital available than ever, but it’s all chasing the same narrow set of “clean” deals that already have traction. Meanwhile, the cost of creating that traction has dropped by 70–90%, but founders can’t access the smaller amounts of capital they actually need to generate it.
Back to Sarah: she doesn’t need £500k to hire a team. She needs £50k to pay a compliance expert who’s sold to enterprise buyers before, and a product operator who’s run pilots like this. Give her that, and in two months she’ll know whether to pursue this business or pivot. But that’s not a check size most VCs write, and it’s too commercial for most grants.
What Actually Changes When Building Gets Cheaper
Cost compression doesn’t just mean “you need less money.” It changes the entire logic of how startups should be financed:
1. Momentum matters more than runway
When iteration cycles are short, the ability to ship and learn quickly becomes the dominant factor. Having 18 months of runway means nothing if you waste the first six months building the wrong thing. Better to have six months of runway and someone who’s done this before steering you away from the obvious mistakes.
2. Proof can be generated quickly — if you know what proof looks like
The analytics platform founder can have a working product in eight weeks. But will it be the right product? Will it have the features enterprise buyers actually pay for? Will the pricing model make sense? These aren’t technical questions — they’re judgment questions that come from experience. The value isn’t in the code; it’s in knowing what to build.
3. Capital should follow execution, not precede it
In the old model, you raised capital, then used it to hire execution. In the new model, execution is the unlock that makes capital valuable. You don’t need £500k to find out if something works. You need the right 40 hours of someone’s time who’s solved this problem before. Then, once you have proof, you raise capital to pour fuel on what’s working.
“You don’t need £2 million to learn whether a channel works. You need the right operator to run the experiment properly — now, while the opportunity window is open.”
The Sequence Problem: Raise, Then Build vs. Build, Then Raise
Traditional venture enforces a specific sequence:
Raise → Hire → Build → Launch → Raise Again
This made sense when building required months of work and hiring required full-time employees. But now, the natural sequence has flipped:
Build (with fractional experts) → Prove → Raise (on better terms)
The problem is that founders are trapped between two worlds. They can’t execute the old sequence because they don’t have enough traction yet. And they can’t execute the new sequence because they don’t have access to execution-first financing that lets them prove the concept before committing to a large raise.
This is where Sarah found herself. She knew exactly what she needed to test her hypothesis. She had access to the right fractional operators. The entire validation experiment would cost £35,000. But investors wanted to see traction before writing a cheque, and she couldn’t create traction without that focused execution.
What This Means for Europe and the UK
This mismatch hits European founders particularly hard. We have incredible talent density — world-class engineers, operators, and domain experts across every major city. But our capital market has always been more conservative, more concentrated, and more focused on later-stage deals than the US.
Cost compression should have been our unfair advantage. We can now build world-class companies with a fraction of the capital that US founders burn. A £300k seed round in London can go as far as a $2M round in San Francisco, if used wisely.
But we haven’t built the financing infrastructure to leverage that advantage. We’re still trying to copythe US model — big rounds, full-time teams, 18-month runways — in a context where those assumptions don’t fit our reality.
The opportunity is to build financing that matches how startups actually get built today:
Smaller initial rounds (£200k-£300k) that focus on proof of concept, not scaling
Execution budgets that pay for senior expertise, not just engineering hours
Milestone-based capital release that rewards momentum, not just time elapsed
Outcome-aligned payment structures that let experts share in upside without diluting founders or sitting on cap tables
What Execution-First Financing Looks Like in Practice
Let’s make this concrete. What would execution-first financing look like for Sarah?
She raises a £250k round from angels and early-stage funds who understand the new model. This is enough to cover:
Six months of her own runway (£60k)
Basic operating costs (£30k)
An execution budget (£160k)
She converts £80k of that execution budget into deliverable-based contracts with three fractional operators:
A product operator who’s built compliance software before (£25k for an 8-week MVP)
An enterprise sales expert who’s sold to compliance teams (£30k for pilot customer acquisition and validation)
A technical architect who’s integrated with enterprise systems (£25k for security and integration strategy)
Each contract is milestone-based, not hourly. Payment triggers on verified delivery: “working prototype with five enterprise users” not “160 hours of development time.”
Operators are paid in a blend: 30% cash now, 70% in portfolio-linked execution units that create upside exposure without sitting on the cap table or creating complex equity negotiations.
In 10 weeks, Sarah has:
A working product that five enterprise customers are piloting
Clear data on conversion intent and pricing willingness
Integration and security architecture that makes enterprise deals feasible
A repeatable playbook for the next 20 customers
Now she can go back to investors with real proof. Not pitch deck traction — actual customers using actual software, with actual data on conversion and willingness to pay. And she still has £170k in the bank and four months of runway.
This is the core insight: you don’t delay growth because you’re waiting for capital. You use a structured execution budget to create the proof that unlocks capital.
The New Reality: Skills Are Worth More Than Money at the Moment That Matters
We’re living through a fundamental revaluation of what’s scarce in early-stage startups.
Capital is not scarce. There’s more venture capital available than ever. What’s scarce is the right execution at the right moment.
The operator who’s built your exact product category before and knows which MVP features actually matter versus which are distractions.
The enterprise sales expert who’s closed deals in your vertical and can tell you in week two whether your positioning will work or needs to pivot.
The growth marketer who’s run paid acquisition for companies at your stage and won’t waste 60% of your budget learning the basics.
These people are worth more than the same amount of money spent on anything else because they compress both cost and risk. They make your experiments cheaper and more likely to generate useful signal.
What This Means for Founders and Operators
If you’re a founder, you shouldn’t have to pause momentum while you pitch for months trying to raise £500k when what you actually need is £50k and the right execution partner. The opportunity window for most startups is measured in months, not years. Delaying execution to chase traditional fundraising is often a strategic mistake disguised as financial prudence.
The path forward is to raise smaller, execute faster, prove more, then raise larger rounds on better terms. But this only works if you can access execution as an asset, not just capital.
If you’re an expert operator, the world has fundamentally changed. The best operators no longer follow the one-company-for-ten-years path. They build wealth through leverage — working across multiple startups, applying their expertise where it compounds fastest, and capturing upside from execution, not just day rates.
But the system hasn’t caught up. You’re stuck choosing between consulting (cash now, no meaningful upside, misaligned incentives) or advising (vague equity promises, messy terms, low accountability). What’s missing is clean infrastructure for turning execution into portfolio upside with clear rules, shared risk, and shared reward.
The Missing Infrastructure
Here’s the uncomfortable truth: the infrastructure for startup cost compression financing doesn’t really exist yet. Not in a standardized, scalable way.
Founders are left cobbling together friends-and-family rounds, hoping to find fractional operators through personal networks, and trying to negotiate bespoke contracts without clear market standards.
Operators are building fractional careers without clear frameworks for how their work translates to meaningful upside, often settling for advisory shares that may never materialize into anything.
What’s needed is an execution finance infrastructure designed for how startups actually get built in 2026:
Standard contracts for deliverable-based execution (not hourly consulting)
Clean payment structures that blend cash and portfolio upside
Milestone verification that ensures accountability without bureaucracy
Portfolio vehicles that let experts build diversified execution-based wealth
Cap table structures that keep equity clean while rewarding execution
The cost of building startups has compressed by 70–90% in five years. The logic of how we finance them hasn’t budged.
This creates a massive opportunity — for founders who can access execution-first capital, for operators who want to build wealth through expertise rather than day rates, and for the ecosystem that figures out how to make this infrastructure standard rather than exceptional.
Because in a world where startups are cheaper to build, faster to validate, and more execution-driven than ever, skills are the new capital.
The question is whether the financing system will evolve to match that reality — or whether founders and operators will build their own infrastructure while traditional venture keeps chasing the same narrow set of deals that already have traction.
Kevin Monserrat