Cove, a D.C.-based software developer of property management tools, has closed on a $6 million investment round led by one of its original commercial real estate customers.
It brings Cove's total outside investment to $16 million following its pivot from being a coworking space provider to a company that specializes in licensing software that allows tenants and property owners to remotely unlock doors, reserve conference rooms, file work orders, manage rent payments and communicate with occupants, among other tasks.
Cove initially used its in-house software to manage the nearly two dozen coworking sites it had across D.C. and Boston, though it went on to shut down these sites following the pandemic as it garnered more interest in its real estate software.
As a result of its investment, Nuveen Real Estate, a division of Chicago-based asset manager Nuveen LLC, will expand beyond its initial deployment of Cove's tech in eight of its buildings to its entire portfolio, which totals more than $147 billion in assets under management globally. Cove's tech — also backed by Blackstone Innovations Investments, an arm of Blackstone Inc. (NYSE: BX) — is used by others and can be found in Chicago’s Willis Tower, Seattle's U.S. Bank Center and throughout the Mosaic District properties in Fairfax.
"It's an awesome validator," Adam Segal, CEO and co-founder of Cove, told me in a video interview about the investment. "We're just staying focused on adding value and keeping our head down in terms of how we think about growth, how we think about success."
Segal said the funding will allow the Dupont Circle-based company to expand its sales and marketing teams. Cove currently has around 40 employees, up from the 30 workers it had a year ago, and plans to add about 10 more over the next 12 months. Segal declined to share revenue, but said company earnings have doubled over the past year.
Expanding the software to better meet real estate needs beyond commercial office space is also key for Cove's product expansion, Segal said.
"As we tackle more and more verticals, like industrial and retail, we're just putting some more horsepower behind the product," Segal said.
But despite the fresh capital, Segal said he's already eyeing the company's next funding round. He said Nuveen and Blackstone have "been incredibly strategic and helpful" not only with product feedback but also in how to build a business, which Segal now sees as growing rapidly in the years to come.
"I would say in 2025 we'll be looking at another round," Segal said. "We're already engaged with folks. It feels like the market has been slow from a fundraising perspective but it does feel like there's more activity and so we'll definitely be looking at that in the early part of 2025."
The latest venture capital investment figures from data analytics firm PitchBook and the National Venture Capital Association would imply that, at least locally, funding deals are picking up following a downturn that lasted through 2022 and much of 2023. It's estimated that D.C.-area companies reached terms for 67 venture capital deals between April and June totaling more than $1.7 billion combined. That's up 101% from the first quarter's revised figure of $858 million and up 38% from the $1.2 billion local companies raised in the second quarter of 2023.
