Cincinnati exec leaves C-suite role to launch new investment firm with e-commerce focus

A new investment and advisory firm with a singular focus on e-commerce has launched in Northern Kentucky, and the group has already quietly raised and closed its first multimillion-dollar fund, backing one the region’s hottest startups in the process. 

EGateway Capital, which is planting roots in Covington, is headed by managing director Chad Summe, who jumped ship from his role as chief strategy officer at Quotient Technologies, a media and analytics firm, at the start of the year. Behind the scenes, the firm has already raised and closed an inaugural fund worth more than $20 million, investing in Hamilton-based 80 Acres Farms while adding two other companies to its portfolio along the way. 

EGateway is 100% focused on the e-commerce value chain, or how goods are marketed, sold, transacted and delivered, investing in the technologies, platforms and marketplaces around it.

Summe said the need is urgent. The region needs more growth equity, but there’s also the potential to be the “capital of e-commerce.” Greater Cincinnati and the Cincinnati/Northern Kentucky International Airport, given its geographical superiority, he said, have already attracted the likes of Wayfair, DHL, Amazon — which has officially opened its local $1.5 billion air cargo hub.

EGateway wants to play a small role in catapulting that momentum forward.

“I don’t think it’s been fully digested how big the opportunity is (especially) with Amazon. Not many cities have seen a gift like that,” Summe said. “It’s not just about Amazon, but when the world’s largest and most innovative company invests such an enormous amount, it creates a centrifugal force, a magnet, that we think will benefit this region for decades to come. Now the question comes down to, what do we do about it?” 

‘A ripple effect’

Summe, also a member of CVG's board, launched eGateway with an expert team, including partner Mike Veith, a certified financial adviser and former co-founder and business development officer at Constellation Wealth. Both said the concept picked up steam during the Covid-19 pandemic. The last seven months have been spent largely head down. The firm’s experience covers space technology, startups, strategy, consulting, retail, consumer packaged goods and private equity.

The potential is enormous. E-commerce sales will surpass $1 trillion in the U.S. in 2022. Still, only about one-fifth of retail sales are taking place online.

“A lot of people only think about the Amazon box that shows up on their doorstep. But there’s so many ripple effects with this,” Veith said. “It’s changing everything, not just for the consumer, but it’s going to bleed into the workplace and how businesses make purchase decisions. If you think about the gold rush, this is the picks and shovels. It’s the infrastructure that’s going to enable the future of all e-commerce.”

The firm is leasing second-floor space at Icon Marketing’s office in Covington; the buildout is still underway. The location puts eGateway a “little more than a runway” away from CVG and that massive Amazon air cargo hub. From there, the firm is tackling the e-commerce challenge with a dual approach.

One side of the business will handle growth equity investments, targeting post-seed or early-stage companies. The firm closed its first fund, a more than $20 million raise, earlier this year.

The other side will serve as an M&A advisory, led by Mark Sancrant, a 20-year investment banking and corporate strategy veteran. Sancrant, founder of Blue Ash Capital, also served stints at Prudential Securities, iNET and Over-the-Rhine agency Empower.

The M&A team will partner with $5 million-$100 million companies and guide them through the buying or selling process. For founders, that can be one of the biggest decisions they make.

“We want to use our expertise and operating experience to help those folks at that right time to drive the best outcome,” Summe said.

In terms of capital, eGateway has invested in three companies to close out its first fund.

Its investment in 80 Acres is arguably the most headline-grabbing, given the vertical farming startup’s record $160 million raise last month. EGateway, Summe said, was attracted by the company's technology. But there’s equal excitement around Flowspace, which has built tech for e-commerce and retail fulfillment centers that allows for two-day shipping, and Cargomatic, considered an Uber for short-haul trucking.

Both companies are LA-headquartered, but have “serendipitous” Greater Cincinnati ties, Summe said. Cargomatic’s COO and Flowspace’s CTO live in the region, respectively.

“It’s not mandatory, but we hope to create an environment for this region to be considered as a great scaling option (for these companies),” he said.

“A big part of who we want to partner with, is how can we help scale?” Summe added. “With today’s liquidity, there’s plenty of capital out there for a great company. It comes down to, what value can you add? It’s more than writing a check.”

EGateway’s founding shareholders include a slew of Cincinnati executives and investors. The idea, Summe said, is for the firm to have a national perspective but be regionally based. They include:

Summe declined to comment on a timeline for fund two. But the plan, he said, is to actively scale the portfolio.

“This story is organically happening, and we think that’s an advantage that few regions can boast about,” Summe said. “We believe there’s an opportunity in this space to do things differently. We’re just getting started.”