In a significant move to transform the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round in Fence, a startup dedicated to developing software for the operational layer of structured credit deals. This round also saw participation from Parafi Capital and Crane Ventures. Fence's primary objective is to replace the traditionally fragmented and manual processes, which often rely on spreadsheets, PDFs, and email, with a unified system that provides real-time updates. 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 that its solution can significantly reduce costs for major asset managers. In collaborations with BBVA, one of Spain's largest banks with $800 billion in assets, Fence has reportedly achieved lower funding costs for borrowers and decreased operational workload while tracking large volumes of loans. Notably, Fence utilizes blockchain technology as back-end infrastructure rather than a front-end product, employing smart contracts to manage cash, collateral, and deal terms without promoting tokens or crypto wallets to banks and asset managers. By leveraging APIs, software checks, and smart contracts, Fence can expedite the traditionally time-consuming process of loan data verification, report generation, and payment clearance.
The company can also tokenize lender positions in financing vehicles and underlying loans or invoices, facilitating the transfer of positions, borrowing against them, or automatic payment upon ownership changes. However, tokenization is only used when it adds significant value.
Montero emphasized that Fence aims to build the infrastructure for capital markets, distinguishing itself from companies that merely digitize paperwork. With approximately $1.5 billion in assets overseen across its platform and collaborations with firms like BlackRock and Fortress, Fence can onboard new deals in weeks, a significant improvement over the standard months-long process. The newly acquired funding is expected to support the company's expansion in the U.S.
and product development, driven by the conviction that enhanced data speed and reduced manual steps can fundamentally reshape the operational backbone of credit markets.