Academic entertained by individualists — they're capital people (9)

'capital people' is the definition.
The answer and definition can be both people as well as being plural nouns.
Maybe there's a link between them I don't understand?

'academic entertained by individualists' is the wordplay.
'academic' becomes 'don' (type of academic - especially at Oxbridge).
'entertained by' indicates putting letters inside (inserted letters are hosted or entertained).
'individualists' becomes 'loners' (loner is a kind of individualist).
'don' placed inside 'loners' is 'LONDONERS'.

'they're' acts as a link.

Can you help me to learn more?