Definition
Sourcing Model
The traditional growth equity approach of hiring teams of analysts to proactively cold-outreach to founders who haven't raised yet.
From the episode “"Your Code Is Worthless" A Top VC Just Told Us Why | The Trillion-Dollar Founder Personality Type Nobody Talks About”Hear it on the podcast1 episode
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Related terms in Startups & Fundraising
Service as softwareA model where a service offering is delivered through software automation. Hatter delivers SEO as a service but automates the execution layer with AI on the backend.Software + Services (Productized)A business model pairing a low-cost, sticky software entry point with higher-margin professional services upsold after trust is established. The software generates baseline recurring revenue and handles the core operations; the services are optional and can be turned on and off. The model lowers acquisition friction (buyers commit at low price), reduces structural churn risk (software is harder to cancel than services), and creates a natural upsell sequence to high-value customers who have already validated that they'll pay.Software + Services ModelA business model that combines a software platform with human-led services delivery — consulting, coaching, events, content — to ensure adoption actually happens rather than just licensing. Section uses this model because enterprise AI adoption requires behavioral change, not just tooling access. The services layer is what moves organizations from 10% to 30–50% AI adoption.Solo GPA venture investor running a fund alone, part of Tim's current raise strategy.Strategic InvestorAn investor who brings something beyond capital - usually industry access, customer relationships, or operational expertise.Sweat EquityValue contributed to a company through founder and team labor rather than capital investment. In a bootstrapped company, sweat equity is often the primary funding mechanism — founders and early employees accept below-market compensation in exchange for ownership stakes, betting that the long-term equity value will exceed what they gave up.TAM (Total Addressable Market)Total addressable market.Tech Moat CollapseThe erosion of competitive advantages historically held by companies with large engineering teams. Before AI, a complex software product - a marketplace, an enterprise workflow tool, a regulatory processing system - required years of development by teams of ten or more engineers. That development time and cost created a moat: by the time a competitor could build a comparable product, the first mover had relationships, data, and distribution. AI has collapsed this dynamic: a marketplace that took two to three years and ten engineers can now be built in twenty-eight days with one engineer. The moat no longer comes from the ability to build complex software - it comes from distribution, customer relationships, proprietary data, and the ability to deliver outcomes reliably. Brennan's corollary: service industries that assumed software complexity would protect them from disruption are now exposed.