Case study: Covercy

Opportunity

Covercy saw an opportunity to improve financial operations and eliminate manual payment processes associated with managing commercial real estate investments.

Solution

With Unit, Covercy’s customers can automate waterfall distribution payments, as well as issuing and collecting capital calls.  

What Covercy built with Unit

• Automated ACH payments
• Interest-earning deposit accounts

Streamlined payments for investment managers

Covercy is an investment-management platform built specifically for the commercial real estate (CRE) space—the first of its kind to offer embedded cash accounts. By bringing real-estate assets, investors, and banking together in one place, Covercy provides its customers with a single platform to run their businesses. 

Until recently, managing CRE investments was daunting in its complexity and potential pitfalls. Routine tasks like raising capital from investors and paying quarterly distributions required dozens of hours of busy work.

Given that most firms have multiple investments, with multiple investors per property, the administrative burden of making quarterly distribution payments could quickly add up to dozens of hours each month. As a consequence, CRE firms have typically hired dedicated staff just to handle payments.

With Covercy, the payments process is automated—a feat they’ve accomplished by embedding a wallet within their platform. This wallet connects investors to investment firms for capital calls and distribution payments. To power these financial products, Covercy partners with Unit and Thread Bank. 

“We had previously worked with another banking-as-a-service platform, but they couldn’t work as quickly as we needed,” says Doron Cohen, CEO of Covercy. “We evaluated basically every other vendor in the space. It became obvious that Unit was the fastest and most secure solution.”

Payments minus the hassle

Each quarter, real-estate investment managers typically make distribution payments, sending a share of revenues to their investors.

In the past, that meant calculating (and re-checking) each distribution amount in a spreadsheet. Then, investment managers (or their employees) would have to manually enter and confirm each ACH payment on their bank’s website.

The process required dozens of hours of administrative work, and it was ripe for human error. If something went wrong, the fund manager would have to turn into an amateur detective: they would have to check through bank-account transactions to discover which ones had been unsuccessful, and then call investors to troubleshoot. Most of these challenges also apply to the process of collecting funds for a new investment.

With Covercy, the payments process is automated. Investment managers no longer have to worry about collecting and updating investor bank-account information; the Covercy Investor Portal allows the investor to manage where they want the funds deposited and withdrawn. Now, collecting investor funds and sending quarterly distributions can be executed with a click. Finally, Covercy monitors payments to ensure that they’re successful and notifies investors and fund managers about their status. 

“With Unit, ACH payments are embedded in our platform,” says Cohen. “We calculate the distributions, notify the investor, and move the money automatically. If a payment fails for any reason, we notify both the fund manager and the investor. It’s the one-click checkout experience for distribution payments.”

When making and receiving ACH payments, investment managers have the option of linking their external bank accounts. But they can also take advantage of Covercy Wallet accounts. These business bank accounts, powered by Unit and Thread Bank, offer competitive interest rates. They also provide enhanced payment speed, security, and transparency.

Building trust with customers

When a person invests with a CRE investment firm, they must hand over some of their most sensitive personal information. Earning and keeping their trust is paramount. 

Covercy helps investment managers build trust with investors by providing additional layers of security and transparency. For starters, Covercy and Unit handle investors’ sensitive personal information—things like bank-account numbers—so that investment managers don’t have to receive and store it. (In the past, it was not uncommon for such information to be stored in spreadsheets on personal laptops, a major security risk.)

In addition, the Covercy Investor Portal allows investors to log into and manage their accounts. They can do things like update their bank-account information, make new investments, see how their existing investments are performing, track payments, and download tax documents.

That kind of transparency and ease-of-use is invaluable to investors—but building such a portal would be impractical for many CRE investment firms, who prefer to focus on their core competencies. So Covercy takes care of it for them.

Finally, Covercy partners with Unit and Thread Bank to provide industry-leading payments compliance. Working together, the three teams conduct KYC and monitor transactions to help keep bad actors off the platform and prevent things like money laundering and terrorism financing.

“In Unit, we’ve found a partner who cares about security and compliance as much as we do,” said Cohen. “As a result, our customers—and their customers—can feel confident that their money is safe.”

Investing with a single tap

Partnering with Unit and Thread Bank to power their embedded payments and deposit accounts frees up Covercy to focus on the investment management firm’s experience.

For example, they plan to keep building on the customer experience. In the short-term, they are adding integrations to property management tools and even better distribution calculations. Looking ahead, Covercy plans to add more payment methods and make it even easier for investment managers to understand what’s going on in their accounts.

“Because of Unit, we can scale Covercy into an entirely new user experience for managing funds and raising capital in commercial real estate,” concludes Cohen. “Unit has been an integral part of our product, from onboarding to identifying areas to grow our business. We’re excited to continue the partnership.”

Covercy is a financial technology company, and is not a bank. Banking services provided by Thread Bank, Member FDIC. The Covercy Visa Debit Card is issued by Thread Bank, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa is accepted.