In a significant funding round, Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has invested $20 million in Fence, a pioneering startup dedicated to transforming the $6 trillion asset-backed finance market. This market, where many deals still rely on manual workflows, is poised for a major overhaul. The funding round, which also included investments from 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 tracking loan pools, verifying collateral, and facilitating cash movements, is often fragmented across multiple firms and relies on outdated methods such as spreadsheets, PDFs, and email. As a result, transactions are slowed, and investors are left with limited visibility into the assets backing their investments. Fence aims to revolutionize this process by introducing a single, unified system that updates data in real-time. 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 streamlined process can significantly reduce costs for major asset managers. In partnership with BBVA, one of Spain's largest banks, which oversees $800 billion in assets, Fence has reported lower funding costs for borrowers and reduced operational workload, while successfully tracking large volumes of loans on an ongoing basis.
Fence's innovative approach utilizes blockchain technology as a back-end solution, rather than a front-end product. The company does not focus on promoting tokens or crypto wallets to banks and asset managers.
Instead, it employs smart contracts behind the scenes to manage cash, collateral, and the rules governing these deals. In a typical facility, lenders often wait days for loan data to be verified, reports to be sent, and payments to clear.
Fence expedites this process by pulling information through APIs, running checks in software, and using smart contracts to release cash when deal terms are met. The company can also tokenize lender positions in financing vehicles and, in some cases, the underlying loans or invoices, allowing investors to transfer positions, borrow against them, or receive payments automatically if ownership changes.
However, tokenization is only used where it adds value. As Montero emphasized, 'We don't want to be seen as a blockchain company.
We're building the infrastructure for the capital markets. Others digitize the paperwork. Fence rebuilt the plumbing.' Currently, the company oversees approximately $1.5 billion in assets across its platform, working with prominent firms such as BlackRock and Fortress.
It can onboard new deals in weeks, compared to months under standard processes. The funding will enable the company to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit markets' back-end infrastructure through faster data processing and reduced manual steps.