D.C.-based cove has raised $10 million to grow its proptech software, highlighting a considerable shift, or perhaps evolution, of its business model from operating its own coworking spaces to providing a technology service to others.
Blackstone Innovations Investments, an arm of Blackstone Inc. (NYSE: BX), was lead investor in a group that also included Kastle Systems LLC, known for its office building access key cards, according to an announcement Wednesday. Cove declined to identify other investors or their specific contributions.
It intends to use its new cash infusion to hire more people, cove CEO and co-founder Adam Segal said in an interview. The company had something like 18 full-time employees before the new year, but plans to have around 30 by the end of the quarter.
Cove — the brand name for Livelyhood Inc., which started in 2013 — sells software that’s meant to be a one-stop-shop for both tenants and owners or property managers. For instance, tenants could use an app, integrated with Kastle’s system, to open doors, in place of a key card or fob, Jeremy Scott, cove chief technology officer and co-founder, said in an interview. Tenants could do myriad other things, too, including booking rooms, ordering food and filing building work orders. Landlords or managers could also use the software to manage billing and scheduling, communicate with tenants and the like.
In a nutshell, cove aims “to be the glue and connect everything under one roof,” as opposed to running multiple legacy systems to perform different operational tasks, Scott said.
“In cove, we have found a company that we believe can help landlords shape the future of work,” John Fitzpatrick, Chief Technology Officer of Alternative Asset Management Technology at Blackstone, said in an email.
Cove’s technology platform has always been at the center of the company’s business model, first deployed at its own locations. At one point cove operated more than 20 coworking spaces — called “coves,” incidentally — across Greater Washington and the Boston area. Its operation at that time resembled WeWork’s pandemic-launched All Access program, which leases space in buildings for subscribers to access on an ad hoc basis. But whereas WeWork has stuck with running physical locations, adding recently to its portfolio, cove is down to one site in Dupont Circle, which also serves as its company office.
“We haven't leased space for years,” Segal said. “Over the past three years we've taken this same platform we literally built for ourselves as operators and started to license it to large commercial office owners.”
Covid didn’t inspire that shift — cove had already entered agreements with The Meridian Group and Rubenstein Partners, both Greater Washington building owners — but it “solidified” it, Segal said.
EQ Office, a real estate company owned by Blackstone funds, has also been a customer for more than a year and introduced cove to Blackstone, Segal said. EQ Office deploys cove in its Willis Tower, formerly the Sears Tower, in Chicago, and will soon do the same in select Seattle and California properties.
