Preheat oven to 350°F. Line two 12-cup muffin tins with liner cups. Set aside.
In a small cup mix water with flax seed, set aside.
In a large bowl of a stand mixer fitted with the paddle attachment, beat sugar and vegan butter on medium high speed until light and fluffy, about 3 minutes. Scrape the bowl. With the mixer on low speed, slowly add water/flaxseed mixture and vanilla. Mix until combined. The batter may look curdle at this point.
In a medium bowl, whisk together flour, baking powder, and salt. Add flour mixture in three batches alternately with two portions of milk, ending the process with flour. Scrape the bowl. Add the freeze-dried strawberries and mix the batter at medium speed until well combined, about 1 minute.
Fill muffin cups with the batter 2/3 full. Bake for 20-25 minutes or until top springs back when touched. Remove from oven and allow cupcakes to cool completely before frosting.
While the cupcakes are baking, prepare the frosting. In a large bowl of a stand mixer fitted with the paddle attachment, beat cream cheese and butter at medium speed until smooth. Add vanilla and salt to the mixture, mix until combined. Reduce the speed to low and add powdered sugar and freeze-dried strawberries. Mix at medium speed until combined.
Frost the top of each cupcake using a pastry bag filled with a large open-star tip. Garnish with fresh strawberries.