use of TLS vs daily build of Linux Server

Would there be any downsides to using a daily build of Ubuntu server vs. TLS version for creating server VM's ???
Besides more frequent upgrades, no. In general LTS is also a bluff package, not for all packages are security updates available, so check before if LTS is really your way to go. If you really need a good enterprise distribution, which is stable for 10 years, use RHEL-based system. Otherwise, just use an ubuntu linux and update every 6 month.