By Meghan Hall
The construction funding process is complex and time-consuming, with construction industry professionals tracking and managing everything from draw packages to invoices to lien waivers all at once. While many of these processes can be managed online, streamlining the flow of capital during the active construction process is the goal of Rivur, a new enterprise cloud platform created by Brent Hardy and Max Ellerhorst. The Registry recently caught up with Ellerhorst, the company’s Chief Technology Officer, on how Rivur makes the financial dealings of the commercial real estate industry more transparent.
Rivur is marketed as a workflow automation platform that monitors and manages the funding of construction, development and renovation. What gaps did you see in the construction industry that prompted you to create Rivur, and how did you draw on your experience in real estate to create the app?
The gap in the market is that we have a commercial real estate industry that thrives upon financial controls and reporting. As commercial real estate developers, we all have stakeholders, whether they be our clients, capital partners or lenders, which have detailed approval, reporting and documentation obligations for commercial real estate development.
Rivur was originally conceived out of frustration with the monthly funding and reporting process, which is required on every commercial real estate development project. We were spending a large amount of time and man-hours creating and reviewing our monthly reporting simply because each step in the process was done manually.
The construction and construction funding processes are complex, rigorous and expensive. A successful construction project is a concert of efforts and expertise. There are many stakeholders and each is focused on their own goals, outcomes and expectations. But — there is no one place where these parties can come together and work in the context of mutually-understood truths. We created Rivur to have one reliable source for the project budget and budget-related activities, payment requests and fundings. Updates made in Rivur happen in real time, seamlessly integrate into capital request and payment applications and give the owners, lenders and vendors instant access and insights. Brent (Hardy, CEO) and I (Max Ellerhorst, CTO), have both had extensive careers in commercial real estate. Brent is an architect, a construction expert and an experienced project manager. He knows what happens on site, what problems happen and the pain and complexity of managing these projects on the construction side, as well as on the funding side through payment applications and monthly loan draws. I have experience on the lending, servicing and asset management side. I know what is important to lenders to validate their advances and secure their investment. I know how capital is sourced and selected and the complexities of managing and verifying compliance with funding parameters. And importantly we both know how good projects look and work.
Why is giving CRE professionals insight into at-risk capital pivotal for the progression of the market?
If you follow the flow of capital in a typical commercial development deal, you will find that there are many current enterprise platforms for analyzing risk pre-acquisition or pre-investment, during ongoing operations, and certainly CRE transactions are well covered with valuable data analytics and other enterprise platforms. What Rivur is seeking to accomplish is to bridge the “data gap” between deal formation and ongoing operations. Active development is the riskiest phase of commercial development, and we believe that providing real time insights and analytics during active development will allow for better decisions and ultimately lead to better outcomes.
We have seen an overall trend in CRE technology for more risk analysis and data analytics. There is now a large marketplace for CRE professionals to analyze at-risk capital when you look at operating platforms, transactions and deal modeling. Rivur is a natural progression of turning that same attention to what is arguably the riskiest part of commercial real estate — active development. We believe that we can track that at-risk reporting and provide insight to the at-risk capital during the actual development and construction process.
This is an inflection point in the marketplace for CRE technology and even more so for CRE information. I see a shift coming from important and valuable information fragmented and stored with service providers towards functionally-specific data administered, structured, leveraged and owned through purpose-specific verticals, like Rivur. Rivur is helping to make CRE owners and lenders also data owners not only service buyers. We believe provider-owned datasets will and should be replaced with single sources of current and accurate facts. Successful projects are managed effectively and funded on time. Vendors who are paid in a timely fashion stay on the project and complete their work. Lenders need autonomous compliance, intelligence into the appropriateness of the amount and duration of certain costs and a reliable resource for this information they can extend into their own organization and processes. Every part of the construction invoicing and funding process must speed up, be enhanced with automation and be augmented with intelligence. Rivur accelerates these processes and maintains absolute records of facts, actions, changes and trends.
Why is there a lack of transparency in the industry to begin with?
CRE development is complex and risky. To fund a project requires expertise, relationships and accurate communication of a vision. River provides access to a reliable and current source of truth made real by facts, records and effective reporting. Traditionally this data is held with a services provider or managed deliverable by deliverable in Excel & email. The lack of transparency is a by-product of the tools one had to do this job and the resources any firm cared to devote to a solution. With Rivur, you can buy excellent records and best-in-class project accounting and resources one project and one month at a time. You can also structure the data for your entire catalog of commercial development into useful project intelligence for all the projects you do in the future.
Can you explain a little bit about how Rivur works? What about the platform allows parties to collaborate more effectively?
On Rivur you can set up your projects, which can be any type of commercial construction or development. Rivur becomes the single platform for collecting, analyzing and reporting on any project cost or other financial information. This includes tasks such as establishing project budgets, tracking invoices, or verifying if insurance requirements are kept current. Where Rivur really shines is that once you begin to work in Rivur and keep track of the basics, we are able to leverage that data to provide automated insights into where you may be out of compliance [and] where you have a budget that governs on what, with whom, when and how you should spend on a project. One of our most appreciated features by users is the ability to automate the monthly draw package, where a single report can be created and downloaded in seconds with all reports and invoicing backup properly accounted for.
With respect to collaboration, Rivur allows users to configure customized approvals for budget revisions, invoices or draws. This helps verify and assure compliance with any internal corporate or project compliance obligations. We also provide options to allow vendors to submit invoices electronically to Rivur directly, which streamlines the collection and data input efforts. Since we do not have any restrictions on the number of users, we have some individuals who are in Rivur day-to-day running the administration of a project and others who are only providing a monthly review of a budget revision or submitted draw package.
What impact has Rivur had for its clients? Has it been able to streamline how quickly projects are constructed? If so, by how much?
We have launched recently and currently have just over $750 million of active project budgets in Rivur and are processing about $400,000 in invoice approvals monthly. We are actively analyzing the turn times on the invoices to funding [process], and we know our process is much more efficient and faster from invoice receipt to approval to funding. We have had success with connecting directly with the vendors, so they can enter their own invoices and see the status — and know they will get paid.
We know with our existing customers that we have reduced project accounting costs over 400 percent; that is staff and service providers who used to get paid to type invoices into a spreadsheet, check the totals and compile a report. What we like the most about this is that it is a good evolution. We don’t have to send copies to each other anymore.
How does Rivur stand out compared to the numerous other CRE tech platforms currently vying for funding and coming to market?
Rivur is unique in that we are a functional tool transforming what is an invisible, yet painful, process in many organizations. There is an odd acquiescence to the old way of doing things as “it’s just the way that it is done.” We believe the work performed in Rivur is the only and best way to manage the construction budgeting, invoicing and payments process. If you are in this business, you do this work. If you are not on Rivur, it is harder, more prone to errors and much more expensive. We believe in the rise of CRE tech and are thankful to be a part of this trend, [but we are] also differentiated by our singular focus and purpose.
What is your favorite feature of the app and why?
My favorite feature of Rivur is the invisible structure we are creating as you work. By using the application to do your day-to-day job, you build a data structure that currently does not exist in commercial real estate. You have cost categories, vendors, amount and durations of spends, classification of costs for each project individually and ALL your projects in total. We can analyze that. By entering invoices and structuring draws we can see the actual curve and trend of allocations of a total amount across time. We can use that to project remaining costs, allocations per period and projected durations. With a portfolio of projects, you create a structure and the content to power intelligence and predictive analytics and a framework that lets you anticipate and not only react. This is invention and innovation, and truly a remarkable transformation in our business.
Rivur is currently seeking early stage venture funding. How much is Rivur seeking to build its platform, and what does Rivur hope to do with the funds?
We’re looking for interested partners with experience in commercial real estate technology as well as services firms and lenders. There is a tremendous opportunity to become the place where this information is created. We’ll spend the funds on enhancements to our product and engineering teams, specifically to build out capital sourcing, enhanced reporting and client integrations. Beyond those functional enhancements we are very interested in “Service AI” and “Internet in Real Life” potential we are creating. You will be able to ask Rivur ambiguous questions and get meaningful responses (e.g. “Rivur, have we paid the Architect yet this month?” “Rivur, how much should a 150 unit select service hotel in southern California cost?”). You will also be able to configure your “Playbook” at an organization level and ask Rivur to do things (e.g. “Rivur, get an updated W9 from the architect.” “Rivur, set up Thomas Concrete as a vendor and email me when they’re done.”). Rivur will become your partner and agent and resource capable of call and response, as well as autonomous actions.