Jan 25, 2024 · 51m · capital-allocators
Chad Summe and Mike Veith – Corridor of Commerce at eGateway Capital (EP.364)
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Capital Allocators, host Ted Seides sits down with Chad Summe and Mike Vieth, partners at Cincinnati-based eGateway Capital, to examine their operator-led growth equity strategy. The discussion details their non-traditional career paths, the four pillars of commerce digital transformation, relationship-driven deal sourcing, and the strategic advantages of the Midwestern commerce corridor.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ted holds 9.9% of the talking time here. How this is scored →
Ted as informed peer 3.2 Guest teaching 4.8 Guest disagreement 0.0 Ted pushing back 0.0
speaking balance: gold is Ted, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 42:50 Highlighting CPG margin erosion
In a completely collaborative sponsored discussion, Chad presents his sharpest industry critique regarding how retailers have captured margin and power from traditional CPG brands.
Hardest push from Ted ▶ 35:02 Clarifying geographic mandateTed asks where Cincinnati fits in their investable universe, prompting Chad to clarify that their mandate is national rather than geographically constrained.
Biggest teaching moment ▶ 21:00 Cincinnati's concentrated logistics powerChad educates the host on the unique concentration of logistics infrastructure within 100 miles of Cincinnati, housing three of the top four US physical cargo air operations.
Ted holds their own ▶ 22:24 Framing thematic commerce pillarsTed neatly synthesizes Chad and Mike's operational background and regional focus, directly asking how they translate that thesis into structured investment criteria.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ted as informed peer | Guest teaching | Guest disagreement | Ted pushing back | Why |
|---|---|---|---|---|---|---|
| Chad Summe's Submarine Service and Early Leadership Lessons | 3 | 4 | 0 | 0 | Ted prompts Chad to reflect on leadership lessons from his five years in submarine service. Chad explains how leading senior enlisted crew members at a young age requires earning respect and achieving unconscious competence. | |
| Brand Building and Consumer Centricity at Procter & Gamble | 3 | 5 | 0 | 0 | Ted inquires about the science versus art of brand building at Procter & Gamble. Chad details how global brand stewardship like Pampers balances operational scale with daily consumer trust and rigorous communication practices. | |
| Hypergrowth at Quotient Technology and Founding eGateway Capital | 3 | 4 | 0 | 0 | Chad contrasts corporate culture at P&G with the fast pace of adtech at Quotient Technology, explaining why he and Mike decided to build an operator-led growth equity firm. | |
| Mike Vieth's Career Background and Passion for Investing | 3 | 4 | 0 | 0 | Ted explores Mike's path from Merrill Lynch to the fiduciary model and multifamily office investing. Mike outlines his motivation for creating a thesis-driven firm based in Cincinnati. | |
| Shared Values and Cincinnati's Corridor of Commerce Advantage | 3 | 6 | 0 | 0 | Chad articulates why Cincinnati acts as a strategic corridor of commerce, noting its regional cargo infrastructure with Amazon, DHL, and UPS hubs within a 100-mile radius. | |
| Investment Strategy and the Four Pillars of Commerce | 4 | 5 | 0 | 0 | Mike outlines eGateway's four pillars of commerce (made, marketed, sold, distributed). Chad defines their target profile as growth-stage B2B enablement technologies north of ten million recurring revenue. | |
| Relationship-Driven Sourcing Engine and Diligence Edge | 4 | 4 | 0 | 0 | Mike and Chad describe their relationship-led sourcing engine, explaining how they provide strategic value and customer introductions prior to formal investment rounds. | |
| Portfolio Construction, Value Creation, and Underwriting Standards | 4 | 4 | 0 | 0 | The guests explain portfolio construction around fifteen core positions across Series B and C rounds, focusing on 3-5x return underwriting and downside protection. | |
| Case Study: Sourcing and Backing Overhaul | 3 | 5 | 0 | 0 | Mike walks through their flagship investment in Overhaul, demonstrating how a 10-month relationship and an innovation day led to a secured allocation in a high-value supply chain security platform. | |
| Scaling Enterprise Technologies in the Midwest Region | 3 | 5 | 0 | 0 | Chad clarifies that eGateway invests nationally, but leverages the Midwest's proximity to major enterprise customers to help portfolio companies scale efficiently. | |
| eGateway Capital's Multidisciplinary Team Structure | 3 | 6 | 0 | 0 | Mike details their multidisciplinary team backgrounds, including CalPERS veteran Mike Dutton. Chad runs through exciting portfolio holdings such as 80 Acres, Firework, and reverse logistics startup Knock. | |
| Macro Trends: Supply Chain Resiliency and Retail Power Dynamics | 3 | 6 | 0 | 0 | Chad explains the macro shift in power dynamics between CPG brands and retailers over three decades, highlighting how decentralized video commerce empowers brands to reclaim first-party data. | |
| Navigating the Emerging Manager Landscape and Strategic Alignment | 3 | 4 | 0 | 0 | Chad addresses the hurdles of raising capital as an emerging manager without a traditional institutional fund track record, pointing to empirical data on early fund outperformance. |
Statements from this episode (17)
Summe: Coupons.com launched early retail media for Albertsons and Dollar General
“Started out digitizing promotions and went into digital media and being pioneers of what today is one of the fastest spaces in all digital media, which is retail media. So we launched some of the first media platforms for big retailers like Albertson Safeway a…”
Summe: Procter & Gamble structures internal communications as one-page memos
“Everything at Proctor is a one pager. I still try to do that to this day, of just being able to concisely share your thoughts and rationale for why you have your beliefs.”
Summe: Baby care is Procter & Gamble's largest brand category
“I spent most of my career on the baby care brands, and that's a unique dynamic. It's Procter's biggest brand.”
Summe: Capital in growth equity is commoditized compared to operator expertise
“In the words growth capital, too much emphasis has been put on capital. It's become somewhat of a commodity. Our interest on the other hand was to focus on the word growth. We thought there was a lack of operator expertise and true knowledge around growth”
Summe: The US Midwest presents an undercapitalized investment arbitrage opportunity
“We think the Midwest is undercapitalized. We believe in that. We think there's an arbitrage opportunity as a lot of US industry sits here with not a lot of the capital.”
Summe: Three of the top four US logistics assets surround Cincinnati
“So what we like to say is within a hundred miles of Cincinnati region, you have three of the top four physical assets around the country, around the movement of goods.”
Summe: eGateway Capital operates an in-house boutique M&A advisory shop
“One of our partners is a longtime investment banker in this space, and we have a boutique M&A shop that's under the eGateway banner, and if we can help with non-organic growth, we're really excited to do so.”
Summe: Liquidation preferences have returned to growth-stage deal structures
“We've seen structure return in the marketplace in the form of liquidation preferences.”
Vieth: Overhaul tracks high-value cargo for Apple, Dell, and Pfizer
“Their customers are, I think, high-value goods. So Apple, Dell, Microsoft, Pfizer, Bristol-Myers, some cold storage, where they're Tracking and monitoring the environment of this high value cargo from beginning point to end point.”
Summe: Midwest startup advantage is customer proximity, not cost savings
“And I think it's way beyond cost benefits of not being on the coast. It's really more around being closer to your customer. So much of us industry sits right here in the middle of the country. And when you're a startup moving to growth stage on the coast, some…”
Summe: Vertical farming startup 80 Acres is profitable at scale
“Take a company like 80 Acres. It's a vertical farm that is doing something that has never been done in the history of mankind. Producing food indoors, at scale, and actually making money.”
Summe: Cargomatic Connects Truckers to Nine of Top Ten Retailers
“Or Cargomatic, a digital freight marketplace connecting truckers to credential demand from nine of the top 10 retailers, getting things through ports to the first point of distribution.”
Summe: Returned merchandise is an $820 billion annual problem
“Reverse logistics, the world of return merchandise, especially relevant right now after the holiday season, an eight hundred and twenty billion dollar problem, actually, and that it's getting bigger every year.”
Summe: Walmart drives 30% of P&G's business; P&G drives 1% of Walmart's
“P&G makes up maybe one percent of Walmart's business and Walmart makes up today. I'm using round numbers, maybe 30% of P&G's business.”
Summe: Five players control 80% of total media spend
“Five players control 80% of media spend. We believe that has to revert back to the mean.”