Are AI Tools Shrinking Software Startup Teams?

Editor’s Note: Big update—Kingscrowd’s new Reg CF raise is now live on StartEngine. If you believe in our mission and want to support the next chapter of diligence in alt investing, take a look here.

CHART OF THE WEEK

Are AI Tools Shrinking Software Startup Teams?

Some recent team size data from Carta across funding rounds suggests software startup teams have been shrinking since 2022, raising the obvious question: is AI replacing hires, or is this just the post-2022 capital efficiency era? For this week’s Chart of the Week, we pulled Reg CF and Reg A+ software raises and compared team size trends by stage. The average chart looks “Carta-like” at first glance, but once you switch to the median, the story changes fast. Click to read the full breakdown and what it means for issuers, investors, and platforms.

Have a suggestion for a data story you’d like us to look into? Submit by replying to this email.

KINGSCROWD PODCAST

SpaceX $1.5T? | Kingscrowd CF Raise | Aptera IPO | Secondaries

By Sam Fiske / Watch | Apple | Spotify

The team breaks down how pre-IPO targets anchor secondary prices, why SPV “lasagna” matters for retail access, and why crowdfunded IPOs see extreme day-one volatility (hint: transfers). We also hit the Invest Act’s House passage and announce Kingscrowd’s StartEngine raise.

PITCH REVIEW 💸

By Teddy Lyons \ Deal Report

Brief: Gemist is a California-based jewelry technology startup founded in 2018 that modernizes how jewelry is sold online through digital customization and at-home try-on experiences. After launching as a D2C brand and securing backing from De Beers Group Ventures, the company pivoted in 2023 to a B2B SaaS model, licensing its platform to jewelry retailers to power personalized shopping with tools like virtual configurators and replica try-ons.

Teddy’s Quick Take: Just last week, I watched a two-year-old episode of The Pitch Show where Madeline Fraser pitched Gemist for the first time. I've never really bought jewelry myself, but even as someone totally unfamiliar with the space, her story grabbed me right away. She talked about trying to design an engagement ring online and ending up in some sketchy downtown LA office, handing over cash to a stranger, with no way to visualize or try on what she was getting. It immediately clicked for me how such a massive industry is still so behind on tech, and Madeline nailed explaining why jewelry needs real innovation. She crushed that pitch, and I was hooked on her vision from the jump.

Gemist is bringing the $300 billion global jewelry industry into the digital age with B2B vertical SaaS and AI tools. Think custom design experiences where customers build their own pieces, stacking visuals to mix and match on models, and home try-ons with high-quality replicas that look and feel like the real deal. They started as a direct-to-consumer brand to test and prove the tech, then pivoted to selling it to other jewelry companies. It's all about solving those unique pain points, like the fact that 75 percent of the market isn't even online yet, and generic e-commerce tools just don't cut it for something as visual and personal as jewelry.

What I also love about Gemist is Madeline's track record. She's a three-time founder with a decade of building tech that shakes up old-school industries for modern buyers, including Zoom Interiors (an online interior design platform she bootstrapped in college that landed on Shark Tank) and Hutch (a virtual interiors app that raised $10M from Zillow).

Today, the company is performing well with a projected ARR of $2.2M by year's end (valuing the company at ~9.1X ARR, not bad for a software startup). Back in April, the company was flush with over $2M in cash and burning ~$100K/month. I’ve seen the company pop up in a few AngelList syndicates as well, so I think this is a rare opportunity to invest in a popular venture-backed deal that offers a small allocation to retail investors.

STAFF PICKS 🌶️

Babbily

By Teddy Lyons

Babbily brings multiple leading AI models like ChatGPT, Claude, and Gemini into one simple interface and subscription. With 300+ paying users, it aims to remove friction from how people actually use AI day-to-day.

Ezalife

By Teddy Lyons

EzaLife makes the Button Huggie, a patented, FDA-registered device that secures gastrostomy feeding tubes more safely and comfortably than tape. Clinical trials show it reduces accidental button dislodgement by 77% and boosts caregiver satisfaction by 2.7x over traditional methods.

Enjoyed this newsletter? Forward it to an investing-minded friend and have them signup here.