At Lunch With Restaurant Payment Startup Cover, Which Just Raised $5.5 Million
Mark Egerman and Andrew Cove have shared more than a few meals together. Egerman and I pick the Nicoise salad for lunch at Lure Fishbar in New York’s Soho neighborhood, and he quickly starts snagging fries off Cove’s burger plate without asking.
Splitting meals is what they do — professionally. Their startup, Cover, allows people to set up their payment preferences in advance and settle tabs at restaurants without pulling out their wallets. It’s like the experience of getting out at the end of an Uber ride, but for restaurants.
“Paying is not relevant to eating,” said Cove, who is tall with multiple ear piercings. “Everyone else is competing for eyeballs,” said Egerman, who has an enormous frizzy ’fro. “We want you to keep your phone in your pocket.”
Cover is announcing today it has raised $5.5 million in a Series A round led by Spark Capital and including O’Reilly AlphaTech Ventures and Lerer Ventures, for a total of $7 million raised. The company stats today are: More than 100 restaurants, mostly in New York but some in San Francisco; more than 10,000 users; and more than $100,000 spent with Cover per month.
The Cover experience is not entirely ironed out yet. When we walked into Lure, an Estimote wireless beacon hanging above the front door was supposed to recognize the fact that we all have Cover installed on our phones. That didn’t happen, and Egerman explained a variety of beacon kinks that are being worked out: Last week, the beacon was left open, so some random programmer had reassigned it away from Cover; then Apple introduced a beacon bug in its iPhone software; later, it turned out that the real culprit was Facebook’s Parse mobile developer platform, which had gone down when we arrived.
That didn’t ruin the Cover experience. It just made it so we had to announce to our server that we were paying with Cover. When we were done, she entered our final tab into the store’s Cover iPad app so it split our bill three ways evenly, added a default 20 percent tip and emailed us receipts.
When Egerman called this week to talk about the new funding round, he said the beacon issues had been resolved, and that today 90 percent of push notifications from the beacons result in the people who get notified opting to pay with Cover.
Egerman and Cove met in a Carnegie Mellon dorm where they both lived as students. Later, Egerman led mobile payments at the Consumer Financial Protection Bureau while Cove worked at the startup funding community AngelList. In the early days of Cover they lived and worked out of a cheap apartment to save money.
But they didn’t sacrifice on meals. “We always ate well,” Cove said at the Lure lunch. “We call it the Cover 50,” Egerman added, riffing on the idea of the “freshman 15” pounds gained from abundant food at college cafeterias.
Cove deadpanned, “We just can’t call it ‘dogfooding’ our product,” riffing on the software terminology of “eating your own dog food” so that you know how customers will feel when they use your product.
There’s lots of competition in this particular area of mobile payments: Square already discontinued a similar app, Square Wallet, and the booking tool OpenTable is now experimenting with a way to pay from its app. The difference, said Cove, is that it all comes down to a super smooth, contextually aware customer experience. “We’ve spent more time with restaurateurs than anyone in the space,” he said.
Egerman added they’d eventually like to expand Cover to other types of small businesses — say, beauty salons — but they have no interest in competing for mobile payments deals with big chains like Home Depot.
As we got up and wandered out without looking at a printed check, we ran into Lure owner John McDonald, who showered praise on the Cover app, and then admitted he is an angel investor in the startup.