In today’s challenging fundraising market, CRE fund managers and GPs need to evolve to survive.
When we last spoke with the team at Covercy, we learned how the platform centralizes and streamlines a multitude of investment management tasks to create a single easy-to-manage workflow. The fintech leader has since added a host of functions to its platform, from automated fundraising and distribution payments to a portal for limited partners to a secure Investor Wallet to help generate yield. Read our latest conversation with Doron Cohen, Covercy Founder and CEO and Colin Rau, Director of U.S. Sales at Covercy, to get a look at how their platform helps investment managers differentiate themselves in a crowded market.
Getting a Clearer Picture
A common problem for real estate is that accounting and investor relations are completely disconnected. A typical real estate investment firm with between five and 20 properties would end up with dozens of bank accounts, potentially at different banks.
“It’s very difficult to reconcile cash flows and get an understanding of what’s going on with their assets and their investors,” says Cohen.
By integrating banking, fundraising, distributions and investor relations on a single platform, Covercy gives its clients the ability to see the entire picture at a glance. The newly launched accounting and payments integrations even gives LPs the ability to track their investment performance and documents through the platform, consolidating what had been two disparate worlds under one umbrella.
Additionally, the new Connect External Accounts solution also helps GPs keep track of all their funds on a single easy-to-use platform. Rau said that some mega funds control upwards of 1,000 bank accounts and have to pay out of pocket for custom software just to get a real time picture of what was happening with their business. The Connect External Accounts feature on Covercy allows users to easily track their cash flows and their balances across all their projects instantly within a single platform.
Consolidation Drives Automation
By consolidating all the discrete tasks that would otherwise take up a GP’s time, Covercy allows investment managers to bring in bigger and more complex deals, which are then managed via the platform.
“We’ve done a really good job giving our GPs the ability to do more deals and to get more done,” says Rau. This expansion has created a feedback loop, generating greater demand for more advanced automation as well as greater control and more yield. “Those are all really important pieces of our system and we’ve implemented some good new tools on the Covercy platform to accommodate this.”
For example, Covercy has automated both the quarterly distributions and the fundraising and capital calls processes.
“Covercy allows us to have one platform that addresses all our company’s investor relations needs: reporting, issuance of quarterly distributions via ACH, posting of investor tax documents, and automatic calculation of preferred returns and cash flow waterfalls,” said Bruce Stern, a principal at Red River Asset Management.
“We’ve seen the fintech industry as a whole automating almost every type of payment, but really it seems that the GPs have been left behind,” says Rau.
Traditionally, quarterly distributions are managed manually by a GP, while fundraising and capital calls are handled via a series of emails and wire transfers that practically beg for a phishing attack. On the distribution side, Covercy handles all the calculations and provides intensive validation behind every calculation, which is important for providing a clean audit trail. In addition, payments are made instantly to investors. On the fundraising side, the Covercy platform allows investors to pay easily with the click of a button, which speeds up the fundraising process significantly.
Not only are all of these tasks automated, but the platform allows for automatic reconciliation of payments instantly to produce a capital stack that GP customers would traditionally be doing themselves on a spreadsheet, saving even more time.
The Search for Greater Yield
Commercial real estate also has an opportunity to learn from trends occurring in public markets with the rise of open platforms on the consumer side. For instance, individuals are using tools such as Robinhood to improve control over their funds. When an investor sells a stock on the Robinhood platform, he or she can keep those funds on the Robinhood platform and continue to generate yield on those funds until they’re ready to deploy funds into a new opportunity.
Traditionally, when a real estate investor receives a distribution, that money stays in their checking or savings account, earning negligible interest. Although GPs and LPs don’t fully have that Robinhood experience, platforms such as Covercy are providing an updated investor experience.
“Real estate is catching up with where public markets were maybe 18 years ago,” says Cohen. “We are working to close more of that gap where investment is fully automated, instantaneous and your money is always at work where it yields and you have control.”
Covercy’s new Investor Wallet is a secure, automated solution for these commercial real estate investors that can help track the cash flows of their investments, and automatically generate more yield. As of April 2025, GPs can now yield up to 3.12% interest from idle capital in a Covercy Wallet account while benefiting from FDIC coverage and no loss of liquidity.
Standing Out From the Crowd
GPs are always looking to keep that capital pipeline moving and are thinking about raising capital for that next deal. One way that GPs can differentiate themselves is to show that those uninvested funds are always being put to work in some manner to make money for investors.
“In this competitive environment, GPs need a way to differentiate themselves from others, and it’s not just about getting a great deal anymore,” says Rau. “That’s important. But that’s not all there is to it. GPs also have to show that they are the best caretaker of those investor funds.”
Over the past long-running growth cycle, it was much easier to buy real estate and generate an attractive yield. That is harder to do in the current higher rate environment, and GPs need to maximize their efficiency with tools like Covercy or they’ll be left in the dust.
“Today, it’s a much more competitive industry for our customers, and in order for them to make money, they have to be much more efficient,” adds Cohen. “So, their need for automation has only increased, and that is one of the key growth drivers we’ve seen at Covercy over the last four years, and especially over the last year.”
Covercy is building the investment management platform that handles all of your investments, investor relations, banking, and financial operations all in one place. Join the hundreds of real estate investment managers already on the platform. To learn more, go to covercy.com.