A recent $20 million funding round, spearheaded by Galaxy Ventures, aims to transform the $6 trillion asset-backed finance market by leveraging blockchain technology. This market, where many transactions still rely on manual processes, is poised for disruption. The funding round, which included investments from Parafi Capital and Crane Ventures, will support Fence, a startup developing software to manage the operational aspects of structured credit deals.

Currently, these processes are often fragmented and reliant on outdated methods such as spreadsheets, PDFs, and email, leading to slowed transactions and limited visibility for investors. Fence seeks to replace these inefficient processes 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 this method can reduce costs for major asset managers. In partnership with BBVA, one of Spain's largest banks, overseeing $800 billion in assets, Fence has reported lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans.

Fence's use of blockchain is primarily focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets. By streamlining information exchange through APIs and automating checks, Fence can facilitate faster loan data verification and payment clearing. The company can also tokenize lender positions, enabling investors to transfer positions, borrow against them, or receive automatic payments in the event of ownership changes. However, tokenization is only employed when it adds value.

Montero emphasized that Fence's primary goal is to build infrastructure for capital markets, rather than being perceived as a blockchain company. The company has made significant progress, overseeing approximately $1.5 billion in assets across its platform, working with prominent firms such as BlackRock and Fortress. With the ability to onboard new deals in weeks, compared to months under traditional processes, Fence is poised for further expansion. The funding will support the company's growth in the U.S.

and product development, with the aim of reshaping the credit market through faster data and reduced manual steps.