Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup focused on transforming the $6 trillion asset-backed finance market by harnessing blockchain technology. This investment, which also included contributions from Parafi Capital and Crane Ventures, aims to overhaul the operational layer of structured credit deals, currently fragmented and reliant on manual workflows, spreadsheets, and email.
Fence is developing software to handle this layer, providing real-time data updates and replacing traditional, time-consuming processes. According to Juan Montero, co-founder and CEO of Fence, this approach enables lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports. The company claims its system can reduce costs for large asset managers, as evidenced by its work with BBVA, where it reportedly lowered funding costs for borrowers and minimized operational workload while tracking substantial volumes of loans.
Fence utilizes blockchain as a back-end solution, employing smart contracts to manage cash, collateral, and deal terms without promoting tokens or crypto wallets to banks and asset managers. By streamlining information exchange and using smart contracts to facilitate payments when deal terms are met, Fence can significantly reduce the time required for loan data verification and payment clearance. The company also has the capability to tokenize lender positions and underlying assets, allowing for the transfer of positions, borrowing against them, or automatic payment upon ownership changes, but only when it adds value.
With this funding, Fence plans to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit market's operational infrastructure.