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 for Fence, a startup developing software to streamline the operational aspects of structured credit deals. The investment, which also included Parafi Capital and Crane Ventures, underscores the potential of blockchain technology in overhauling the traditional, manual workflows that dominate the industry. Fence's platform aims to replace fragmented, outdated processes with a unified system that provides real-time updates, enabling lenders to continuously monitor loan performance and cash flows.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 major asset managers.
The company has already demonstrated the efficacy of its approach in deals with BBVA, one of Spain's largest banks, where it reported lower funding costs for borrowers and reduced operational workload. Notably, Fence utilizes blockchain as a back-end solution, rather than a front-end product, employing smart contracts to manage cash, collateral, and deal terms.
This approach allows for the automation of tasks such as data checking, report generation, and payment clearing, which can take days in traditional facilities. Furthermore, Fence can tokenize lender positions in financing vehicles and underlying loans or invoices, facilitating the transfer of positions, borrowing against them, or automatic payment upon changes in ownership.
With this 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 processing and reduced manual steps.
Currently, the company oversees approximately $1.5 billion in assets across its platform, working with prominent firms such as BlackRock and Fortress, and can onboard new deals in a matter of weeks, compared to the months required by standard processes.