Nathan Beckord
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The founder of Captain, Demetrius Gray, has raised an impressive $107.3 million so far, but he’s no first-timer. While his first startup, WeatherCheck, didn’t work out the way he envisioned it, that business paved the way for his current success.
“The incentives weren’t aligned,” Gray explains.
His current startup, Captain, advances money to contractors for home repairs following natural disasters, then gets reimbursed by insurance companies or the government.
The idea has resonated with investors: Using the methods outlined below, Gray was able to raise $100 million in venture debt and $7.3 million in private equity.
I’ve compiled nuggets of valuable knowledge that he shared with me about his experience raising capital, sharpening pitches and networking, as well as the strategies he’s found most helpful as a Black founder.
Fundraising as a Black founder
Gray has developed many mentor relationships, particularly in the Black entrepreneur community. He says he often sees that Black founders stop trying to fundraise too quickly.
He says everyone hears “no,” but it’s important to keep pushing. Eventually, you’ll find an investor or a fund that loves what you do.
His second tip is all about putting on a show: Being unforgettable is the difference between getting passed over and funding your startup.
“It’s a performance,” he says. “The Black community [is] a community of a lot of entertainers and athletes. Take a cue from Serena Williams, Mike Tyson, Floyd Mayweather, LeBron James — the greats — and treat it like it’s a performance.”
Three ways to raise
Gray breaks down the methods he used to fundraise into three steps:
Use Tier 3 investors to get pitch-perfect
It’s the norm to aim to get top-tier investors on your cap table, but Gray says you shouldn’t discount smaller VCs. He used several Tier 3 VCs as a sounding board for pitch feedback.
“Most VCs would be a little shocked to know that they’re being used in that way, but it’s happening a lot. We perfected the pitch [with] smaller funds and lesser-known VCs,” he says.
As long as you’re not completely barking up the wrong tree, this tactic is likely not wasting VCs’ time either. Smaller checks could still come from lower-tier VCs.
Lean on super founders
“Super founders” (those who have raised at least $50 million or exited at over $100 million) were especially instrumental in his fundraising process. Not only did they give him feedback, but they also wrote checks and, more importantly, advocated for him.
Bringing super founders on board was an early signal of success for Captain since all of them had investors, Gray explains.
“With that endorsement, it’s going to continue to open doors. If you need an introduction to a VC, it just becomes easier by virtue of having previous founders on your cap table,” he says.
He adds that while he’s been pleased with his VC partners, the super founders added the most value during fundraising.
Be open to VC scouts
He used resources like Crunchbase and Signal to identify VC scouts. However, once Gray started the fundraising process, word got around and scouts reached out to him.
Their principals incentivize them to find deals, and many scouts can write checks themselves.
Networking, Y Combinator style
Gray’s Louisville, Kentucky, home base might not be the startup haven that Palo Alto is, but location shouldn’t limit a fundraising process. One of the best takeaways from his Y Combinator experience was to look outside his region to make connections.
“Our first investor in WeatherCheck said, ‘Go make the world smaller.’ He meant that in order to be successful in this business, you’re going to need relationships that supersede your geography,” he says.
When networking, Gray advises founders to use what he calls the “relationship muscle.”
“People see the headline, ‘$107 million raised.’ What they don’t really understand is that it was a progressive process of building relationships over time that made that possible,” he says.
“You gotta get social; you gotta get out in front of people and start building relationships.”
Peak pitch performance
The fundraising process for Captain ran mostly during the pandemic, which meant lots of Zoom meetings. Since virtual meetings aren’t going anywhere, Gray has some thoughts on how to really pop on the screen.
First, it’s all about setting the scene. Make your background appealing, be ready for the camera, and prepare to dazzle. Keep the audio sharp and don’t just rely on your laptop to do the job.
Second, he wants you to see the investor you’re pitching to as a person. Investors see pitches all day and often don’t get many chances to reset between meetings.
His trick? Give them a minute. Here’s the script he uses:
Hey, I understand that you’ve had a busy day. I can’t imagine how many meetings you’ve had so far. I’ll give you 30 seconds to just take a breath. And then I’ll start.
He says this approach lets investors get the highlights they need without the whiplash of back-to-back calls, which puts the focus squarely on you and your pitch.
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