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Fundraising in 2024

A new landscape

The world has changed profoundly since 2021, and many people consider the post-pandemic era more challenging than the years that preceded it.
As everything became more difficult, so did fundraising. Inflated valuations and multimillion-dollar deals for mere slide decks—often with no actual product behind them—have become scarce. Those select few who still get there are typically not your average immigrant entrepreneurs building in niche markets.

Around that time, I found myself doing contract work that had started wearing me down with its tediousness. You can only build a data warehouse so many times before you start looking for something more engaging; for me, that next step was working with Large Language Models (LLMs).

In 2023, as I began playing around with Stable Diffusion and LLMs, I realized that a paradigm shift was underway—like a ship to the future leaving the harbor—and I wanted to get on board.
So, like many others before me, I took the leap, invested all my savings, and ended up in California amid a modern-day gold rush.

Let’s rewind for a moment and talk about fundraising.

The Joys of Fundraising in 2024

Raising capital in 2024 requires hard work—not just any work, but the right kind of work. You must be able to strike a subtle balance between your vision and the reality of the market and de-risk the prospect enough so that future investors feel comfortable putting their money in.

One of the most valuable fundraising resources I received was shared with me by one of our Angel investors: this article from Coding VC. When I first read it, I was a solo founder, writing on X (formerly Twitter) and exploring new ideas. As I eased into the startup life, it became clear that many startups don’t fail solely due to market forces; they fail because the founders can’t hold themselves together.

From an outsider’s perspective, backing a lone entrepreneur with no team, no product, and only vague ambitions was obviously risky. At the time, I was living off my savings and stitching together prototypes without actively seeking help.

During this period, I met Noam, who already had a live product. As I refined my LLM skills while working with him, he proved to be a great partner and early design collaborator. He asked the right questions, helped me shape the product strategy, and guided me toward a viable idea. He went on to co-found a successful B2C startup, while my skillset leaned more toward B2B.

Eventually, I recognized that I needed more support. Several months later, I met Boris, with whom I finally got the opportunity to start building a real product.

Finding the right co-founder is a story unto itself, and not worth spending too much time on here. Let’s just say it took a few months, many obstacles, and some hard lessons to find the right person.

Building the Product

We knew that the days of walking into a meeting room and walking out with a term sheet were long gone. If you don’t have a standout résumé—like a successful exit or a stint at OpenAI—you need more than a pitch deck. You need a tangible product, not just a narrative.

Our product concept emerged from challenges we observed while building B2C apps. We kept seeing the same shortcomings in memory management: a lack of effective ways to connect company data to LLMs.

Instead of trying to convince investors with pure theory, we focused on solving those pain points directly. We developed a Python library after one entrepreneur snidely feedbacked, “You think I will use your Docker images?” Since then, we iterated on our approach as we tested and learned about the tooling and the space.

I remember pitching at a Weaviate event, where Philip Vollet gave me a chance to present what we had built. We’d released our first version just hours before. The library barely functioned, and a senior figure from Google mocked it. But it was still a major milestone—we were among the first in the market with a working product.

From there, things began to pick up. We kept posting updates on X, learning how to build a community, and how to receive feedback on what really matters. Throughout this period, we financed our modest lifestyle from our savings, and it became clear that we needed capital to expand the team and manage our increasing workload.

With some traction under our belt, we knew it was time to approach investors again.

Crafting the Pitch

The first step was creating a pitch deck. Initially, I relied on templates and old examples, assuming that once done, I’d be ready to pitch. That illusion quickly disappeared. I soon realized that a deck is never a finished product—it evolves as you receive feedback, uncover new angles, and refine your story.

At first, our deck was a rough sketch rather than a polished, coherent narrative. I realized I needed to practice storytelling, spending countless hours with friends willing to help me refine the language. Over time, we learned some key lessons:

Some Metrics:

Early versions of the deck were rough, but later iterations improved, as confirmed by the time-per-page graph below.

cognee_fundraise_post.png

Angels: The Hardest Investors to Find

Once the deck felt polished, we turned to angel investors. I was advised that securing a few angels first could boost credibility with VCs. Angels can also help with product development and might play a more hands-on role.

On the other hand, angels tend to be elusive and, in my experience, they fall into three groups:

  1. Friends and Close Network: Can be the easiest or the hardest to bring onboard, depending on personal dynamics.
  2. Extended Network Angels: Some have invested heavily in the past, hit a personal limit, and then become more guarded. Others remain open to exciting opportunities.
  3. Strategic Angels: The holy grail. If you find someone whose interests align with yours—where your product complements or advances their own work—you’ve struck gold.

Ultimately, the personal compatibility matters, too—a lot. These investors will be with you for the next 5 to 8 years, so you must ensure the relationship can withstand the test of time.

Reaching them was no simple task. I asked anyone in my network for introductions and had countless conversations. For example, I sent a direct message to Bob, the CEO of Weaviate, after he noticed our X posts. He came on board as an angel and helped us tremendously. Things can work out in unexpected ways.

Approaching VCs

Once we had a product, finding VCs wasn’t as difficult, especially in the AI infrastructure space. Many reached out proactively, leading to numerous conversations over several months.

In my experience, most are window shopping, but always looking to talk in case you have a “stealth startup” or some other signal that matches their internal research. On the one hand, one should be careful not to optimize the product for investors only, since they have many opinions and not as much skin in the game initially. The best approach is to get market validation first and only then talk to them. It can be design partners, users, or revenue.

We spoke to over 50 VCs during our raise. Along the way, I made every mistake in the book:

Here’s what I learned:

Despite all the preparation, there were times when it felt like everything was about to collapse. Boris and I nearly ran out of money. We struggled to pay bills while waiting for deals to close. At one point, I drove to Croatia for a brief vacation, hoping to clear my head, though in truth I barely had the funds. I was about €10,000 in debt and had to borrow money to make the trip.

But having grown up in the Balkans, Boris and I were brought up to be stubborn, deal with unpleasant events, and push through them. After the hardships of the 1990s, everything else felt, as a Ukrainian friend might say, “like a game on easy mode.”

The final signatures came in a most unexpected setting: a campground in Croatia, 50 km from Makarska (a place I never particularly liked). I found myself juggling calls with multiple lawyers, several VCs, and anxious co-founders in the middle of the night, signing paperwork on a laptop with a patchy Wi-Fi connection. It was a chaotic and stressful moment, but perhaps that authenticity and determination were what sealed the deal.

Once the papers were signed, we finally saw a glimmer of light at the end of the tunnel, a long-awaited validation of our hypothesis.

Toward a New Reality

If you keep pushing—iterating, refining, learning from every misstep—you might find yourself signing a deal you’ve fought so hard to secure, even if you’re doing it hunched over a laptop in a foreign campground, running on the fumes of sheer will and a dream too stubborn to die.

New challenges lie ahead, and we continue pushing forward, bracing ourselves for whatever storms may come. This will get more difficult before they get easy, but with existential issues solved, we have a way to push forward.