Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup aiming to transform the $6 trillion asset-backed finance market by harnessing the power of blockchain technology. The investment, which also included Parafi Capital and Crane Ventures, will support Fence's mission to develop software that handles the operational layer of structured credit deals.
This layer, which encompasses tasks such as tracking loan pools, verifying collateral, and managing cash flows, is often fragmented and reliant on outdated methods like spreadsheets, PDFs, and email. Fence seeks to replace these inefficient processes with a unified system that provides real-time updates, enabling lenders to continuously monitor loan performance and cash flows. According to Juan Montero, co-founder and CEO of Fence, this approach can significantly reduce costs for large asset managers. In collaboration with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and reduced operational workload while tracking substantial volumes of loans.
Unlike other companies, Fence utilizes blockchain as a behind-the-scenes solution, leveraging smart contracts to manage cash, collateral, and deal terms. This approach allows for faster and more efficient transactions, with loan data being checked, reports sent, and payments cleared in a matter of minutes rather than days. Fence 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 employed where 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 markets through faster data and reduced manual steps.