An upstart Northern Kentucky-based venture capital firm has closed an eight-figure fund more than two years in the making that now stands as the region’s largest.
Covington’s eGateway Capital has closed on its $94 million Fund II, which it will use to invest in growth-stage tech companies in the e-commerce and supply chain space.
It’s officially the region’s largest venture capital fund to date – and by a long shot. EGateway, founded in 2021, had set an initial target of $100 million when it first disclosed plans for Fund II in early 2022 – it nearly reached that goal despite it being a historically challenging time for fundraising, especially for new firms.
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The fund puts eGateway at $120 million raised. EGateway has invested more than $60 million to date in 12 companies, including locally based 80 Acres Farms. Chad Summe, managing partner, said he’s grateful for the success, but there’s little time to celebrate.
“I wouldn’t be the first to say that fundraising is hard. Now we have to continue to make great investment decisions, and we’ll continue to mature our process,” he told me. “From the beginning, we’ve wanted to build a unique firm that’s tied to our assets here.”
EGateway Capital has invested in three companies from Fund I, a roughly $30 million allotment, and nine companies already out of Fund II. It plans to invest in five to 10 additional companies during its remaining investment period.
The firm is focused on the digitization of the economy and the future of commerce: in other words, how goods are made, marketed, sold and distributed.
It aligns with the region’s historical roots, eGateway said, anchored by public companies such as Procter & Gamble and Kroger and newer entrants like Amazon Air, UPS and DHL, and its talent pool spanning consumer packaged goods, retail and supply chain.
“When we launched eGateway, we felt that there was a need for a firm like ours to exist,” Mike Veith, an eGateway Capital founding partner, said. “Our conviction around the opportunity has only intensified over the past three years.”
The firm is positioned ideally in a “corridor of commerce,” a roughly 100-mile radius that spans Cincinnati/Northern Kentucky, Columbus, Louisville and Indianapolis. "There is simply no location in the country more important to the future of commerce," Summe said.
That’s resonated with investors. Summe said most of eGateway’s backers from Fund I returned for Fund II – and then some.
He declined to disclose eGateway’s target investment returns.
“We are bullish on what separates eGateway in the market – being a thesis-driven firm that’s all about tech-enabled commerce," he said. "Being a new team, it’s that much harder to raise, since traditional investors are looking for a track record that’s more defined. But we want to be the best in the world around that, and our assets here regionally align to that vision in a unique way.”
With the fund now closed, Summe said the firm will focus on deploying more capital and helping its firms grow.
“We built this with the belief that capital should be more than a check. Our commitment is to be an active investor,” he said.
The hope is the fund – and its size – will attract more venture dollars to the region, an oft-heard missing link from founders and ecosystem partners alike.
Currently, eGateway’s portfolio includes Los Angeles-based Flowspace, an e-commerce and retail fulfillment platform; L.A.-based Cargomatic, considered the Uber of short-haul trucking; Nok Recommerce, a resale and recommerce ecosystem for brands and retailers; Austin, Texas-based SamCart, an e-commerce platform for creators; Austin-based Overhaul, a supply chain solution; VidMob, a video content creation network; and Firework, a San Francisco shoppable and livestream video commerce startup, among others.
Prior to eGateway’s close, Refinery Ventures held title to the region’s largest single venture fund, $38 million dating back to early 2022. CincyTech’s “Fund IV,” capped out in 2016, follows at $31 million.
The Avondale-based seed stage firm is currently raising a Fund VI and has more than $30 million committed. CincyTech recently extended the deadline to complete that raise, until Sept. 30, according to a June Securities and Exchange Commission filing. Cintrifuse also raised a $56 million syndicate fund in 2019, which is used to invest in other venture capital firms.
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