Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million investment round in Fence, a company developing software to handle the operational aspects of structured credit deals. This round, which also included investments from Parafi Capital and Crane Ventures, aims to transform the $6 trillion asset-backed finance market by utilizing blockchain technology behind the scenes. Fence's software seeks to replace fragmented and manual processes, such as tracking loan pools, verifying collateral, and managing cash flows, with a single, real-time system. 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.
Fence has reported cost savings for large asset managers, including lower funding costs for borrowers and reduced operational work, in deals with major banks like BBVA. The company uses blockchain as back-end infrastructure, managing cash, collateral, and deal rules through smart contracts, rather than promoting tokens or crypto wallets as a front-end product. By using APIs to gather information, running checks in software, and utilizing smart contracts to release cash when deal terms are met, Fence can significantly reduce the time it takes for loan data to be checked and payments to clear.
Additionally, the company can tokenize lender positions in financing vehicles and underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or automatic payment upon ownership changes. With this investment, Fence plans to expand its operations in the U.S.
and further develop its product, with the goal of reshaping the credit markets' back-end operations through faster data processing and reduced manual steps.