In a significant move to overhaul the $6 trillion asset-backed finance market, a $20 million funding round has been led by Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital. This investment will support Fence, a startup dedicated to developing software for the operational layer of structured credit deals.
The funding round also included participation from Parafi Capital and Crane Ventures. Fence's primary objective is to replace the fragmented and manual processes currently used in the market with a unified system that provides real-time updates.
This new approach is expected to enhance efficiency, reduce costs, and provide investors with greater visibility into the assets backing their investments. By utilizing blockchain technology and tokenization, Fence aims to automate the tracking of loan pools, verification of collateral, and movement of cash, thereby eliminating the need for spreadsheets, PDFs, and email. The company's CEO, Juan Montero, emphasized that their goal is to create a single system that updates data in real time, enabling lenders to continuously monitor loan performance and cash flows.
Fence has already demonstrated the potential of its approach through partnerships with prominent institutions, such as BBVA, where it has reported lower funding costs for borrowers and reduced operational work. The company's use of blockchain is focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms, rather than promoting front-end products like tokens or crypto wallets. By streamlining these processes, Fence aims to reduce the time it takes for loan data to be checked, reports to be sent, and payments to clear. The company has also explored tokenization, allowing investors to transfer positions, borrow against them, or receive payments automatically in the event of ownership changes.
With this new funding, Fence plans to expand its operations in the U.S. and further develop its product, with the goal of reshaping the credit markets through faster data and reduced manual steps.