Demetrius Gray pulled off an impressive $107.3 million fundraise, but he’s no first-timer. While his first startup, WeatherCheck, didn’t work out the way he first imagined, that business paved the way for his current success.
“The incentives weren't aligned,” he explains.
Now, as the founder of Captain, he’s working to solve and fund the climate emergency. After natural disasters, Captain advances money to contractors for home repairs, then gets reimbursed by insurance companies or the government.
And the incentives are certainly aligned with Captain. Contractors are motivated by being able to complete projects faster without waiting for payment, and homeowners get back into their homes faster without fronting the cost of home repairs.
The idea resonated with investors, too. Using the methods outlined below, Demetrius was able to raise $100 million in venture debt and $7.3 million in private equity.
On an episode of the How I Raised It podcast, he shares a wealth of knowledge — from his experience raising capital, sharpening pitches, and networking to the strategies he’s found most helpful as a Black founder.
Three ways to raise
Demetrius breaks down the methods he used to raise $7 million for Captain into three steps:
1. Use Tier 3 investors to get pitch perfect
You might think you only need top-tier investors, but Demetrius says not to 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.”
And 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.
2. Lean on super founders
“Super founders” (those who have raised at least $50 million or exited at over $100 million), were especially instrumental in Demetrius’s fundraising process. Not only did they have feedback from a founder’s perspective, 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 have investors, Demetrius 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,” While he’s been pleased with Captain’s VC partners, the super founders added the most value to his fundraising experience.
3. Be open to VC scouts
Demetrius used resources like Crunchbase and Signal to identify VC scouts. However, once he started running a tight 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
Demetrius’s Louisville, Kentucky home base might not be the startup haven that Palo Alto is. But location shouldn’t limit a fundraising process. Some of the best advice he got 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.”
When networking, Demetrius 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 really made that possible,” he says of his networking style. “You gotta get social, you gotta get out in front of people and start building relationships.”
Peak pitch performance
Fundraising for Captain mostly occurred during the pandemic, meaning lots of Zoom meetings. Since virtual meetings aren’t going anywhere, Demetrius has some thoughts on how to really pop off the screen.
First, it’s all about setting the scene. Make your background appealing, be camera ready and prepare to dazzle. Keep the audio sharp and don’t just rely on your laptop to do the job. Level up. Show that you’re ready.
Second, Demetrius wants you to see the person you’re pitching to as a whole person. Investors see pitches back to back 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 that it lets them get the highlights they need without the whiplash of back-to-back calls, putting the focus squarely on you and your pitch.
Raising as a Black founder
Demetrius has developed many mentor relationships in his time on the startup scene, particularly in the Black entrepreneur community. One of the common things he’s heard is that Black founders stop trying to raise too early. Everyone gets “no’s,” but it’s important to keep pushing. Eventually, an investor or a fund will love 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 worth saying that 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.”
Nathan is also the CEO of Fundingstack.com which is a new platform for VCs and investment bankers to both raise capital and assist clients and portfolio companies.
Users of these platforms have raised over $9.7 billion since 2016.
This article is based on an episode of Foundersuite’s How I Raised It podcast, a behind-the-scenes look at how startup founders raise money.