In a significant push to overhaul the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round in Fence, a startup developing software to handle the operational layer of structured credit deals. The round also saw participation from Parafi Capital and Crane Ventures.
Fence's software aims to replace the fragmented and manual processes currently used in the market, such as tracking loan pools, verifying collateral, and moving cash, which are often managed across multiple firms using spreadsheets, PDFs, and email. This setup can lead to slowed transactions and limited visibility into the assets backing investments for investors.
According to Juan Montero, co-founder and CEO of Fence, the company's system updates data in real-time, allowing lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports. Fence claims that its approach can reduce costs for large asset managers, as seen in deals with BBVA, one of Spain's largest banks, which oversees $800 billion in assets.
The company reported lower funding costs for borrowers and reduced operational work while tracking large volumes of loans on an ongoing basis. Fence utilizes blockchain as back-end infrastructure, rather than a front-end product, using smart contracts to manage cash, collateral, and deal terms behind the scenes.
The company does not promote tokens or crypto wallets to banks and asset managers. Instead, it focuses on providing a seamless and efficient system for managing deals.
In a typical facility, lenders may wait days for loan data to be checked, reports to be sent, and payments to clear. Fence streamlines this process by pulling information through APIs, running checks in software, and using smart contracts to release cash when deal terms are met. The company can also tokenize lender positions in financing vehicles and, in some cases, the underlying loans or invoices, allowing investors to transfer positions, borrow against them, or receive payments automatically if ownership changes. However, tokenization is only used where it adds value.
As Montero stated, 'We don't want to be seen as a blockchain company. We're building the infrastructure for the capital markets. Others digitize the paperwork.
Fence rebuilt the plumbing.' The company currently oversees approximately $1.5 billion in assets across its platform, working with firms such as BlackRock and Fortress, and can onboard new deals in weeks, compared to months under standard processes. The funding will enable the company to expand in the U.S. and further develop its product, with the goal of reshaping how credit markets operate behind the scenes through faster data and fewer manual steps.