If you instead use cheaper 3rd party hosting companies, you may have hurdles to growth and future migration cost since those companies do not have many of the certifications required.
From an investor POV, paying a little extra now is often worth it to reduce risk and remove barriers to explosive growth.
I can see the upside for many things, but you can do that efficiently, not costing 5 figures.
The only risk I can see is the lack of managed services, but Postgres isn't that hard to manage yourself, and other value-add AWS services can still be used (the cost savings of your baseline load being on bare-metal would most likely still offset the bandwidth costs of moving data between AWS managed services and your bare-metal host).
We had migrate our servers 4 times as hosting company kept changing things, then getting purchased by IBM, then IBM was trying to figure itself out.
I didn’t kill the company, mostly due to a lot of really hard work. But it came close.
This also goes some way to explain the leetcode, "hiring only the best from Stanford/MIT" hiring nonsense for pretty mediocre cookie-cutter products that could be perfectly well executed by couple mid-range developers: your developers' resumes are as much a part of any potential acquihire package as the codebase and user data.
2. It is actually increasingly hard to get an industry wide reputable hosting provider ( Cloud, VPS , Metal or not ) that many investors could agree upon. Just like you said which makes DD harder.
3. Amazon actually offer heavy discount and even lots free credit to startup by accredited VC. Meaning the difference in the first few years is actually tiny. And in your example, if it can be run on $500 budget elsewhere you can bet it will literally be free on AWS from those startup.
