A Valley-based entrepreneur is launching a new venture capital firm set up to provide both funding and expertise to help early-stage startups scale.
Justin Gray, along with sales and marketing expert Josh Wagner, co-founded In Revenue Capital, which utilizes an operator-immersive capital model, meaning the firm's partners are embedded within the startups it funds for three to six months to provide market guidance.
“We're not only investing, but providing extra time and a bit of guidance for those portfolio companies,” Gray said. "... All of the members of the fund are former operators, former experts, and current experts within the go-to market.”
Gray is the founder and former CEO of LeadMD, which was acquired by Trendline Interactive — now known as Shift Paradigm — in 2021. Gray was also named a Most Admired Leader by the Phoenix Business Journal in 2019.
Scottsdale-based In Revenue Capital operates under a special purpose vehicle syndicate model, meaning it funds each deal independently.
“I also liked that from a friendliness on the investor side. We're not raising a fund with a bunch of money that's kind of sitting there waiting to be deployed,” Gray said. “We're not getting pressured to deploy funds because now we've already called capital and we need to find something that fits the thesis of the firm."
In Revenue Capital backs Boston startup seed round
In Revenue Capital inked its first investment with Boston-based Statera as part of a $2.5 million seed round led by DWP Capital, an early-stage growth equity firm based in Scottsdale that invests in software and tech-enabled services. Statera is a software-as-a-service company that simplifies physician compensation.
Gray's firm invested $1 million in Statera, while DWP Capital invested $1.5 million.
"We're excited to leverage this new investment to accelerate our rapid growth as Statera transforms provider compensation and performance management," Amy Jackson, CEO and co-founder of Statera, said in a statement. "In Revenue Capital is an ideal partner for Statera as we move deeper into the market and expand the ways in which we deliver value to our customers. The depth of experience that Justin and Josh bring to the table is unparalleled and we are thrilled to integrate their expertise at such a pivotal time."
Gray saw a particular need for funding for early-stage startups and that’s why the firm chose to focus on that segment, he said.
“It’s a great kind of proving ground, where you've got great products and you've got traction in terms of customers,” he said. “All of our target companies have revenue and product in market. And it's really at that critical stage where you either build a a strong go-to market muscle or you don't make it to that series A, so it's definitely the segment that we liked the most.”
Primary focus on software as a service firms
In addition, the firm’s expertise and operator-immersive model can assist founders of early-stage companies overcome market challenges, he said.
“They sometimes don't even know what questions to ask … You've got all these great (limited partners) that have expertise, but the founder has to raise their hand and say, ‘I've got a challenge here, can someone help me?,'" Gray said. "But by the time someone raises their hand, oftentimes it's too late or they're missing opportunities that they could have taken advantage of.”
In Revenue Capital will be funding companies nationwide with a focus on startups in the emerging Southwest, Gray said.
“But we'll look at anything quite frankly. I think there's great founders out there that have great products, especially in vertical SaaS — which is kind of our primary area of focus — that are creating a lot of value and are purpose-built for specific vertical industries,” Gray said.
In Revenue Capital, which will focus on business-to-business startups, seeks to close eight to 10 special purpose vehicle deals this year, Gray said.
“Once we make an investment, we are embedding those operators within the business helping them create a scalable, go to market motion, and are largely focused on what we call partner-led growth or the rise of partner ecosystems,” Gray said. “So that's probably 10 steps farther than any other venture capital firm would be willing to go that I'm aware of, certainly.”
