In a significant move to overhaul 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. The round also saw participation from Parafi Capital and Crane Ventures. Fence aims to replace traditional, fragmented, and manual processes with a unified system that provides real-time updates, enhancing transaction efficiency and investor visibility. According to Juan Montero, co-founder and CEO of Fence, the platform can reduce costs for major asset managers by providing continuous monitoring of loan performance and cash flows.
Fence's approach has already shown promise in deals with BBVA, one of Spain's largest banks, resulting in lower funding costs for borrowers and reduced operational workload. Unlike many blockchain-based solutions, Fence utilizes blockchain as back-end infrastructure, focusing on smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets.
This approach enables faster data processing and reduced waiting times for loan data verification and payment clearance. Fence has also successfully tokenized lender positions in financing vehicles and underlying loans, facilitating the transfer of positions, borrowing against them, or automatic payment upon ownership changes.
However, tokenization is only employed where it adds significant value. With approximately $1.5 billion in assets overseen across its platform, working with prominent firms like BlackRock and Fortress, Fence plans to utilize the funding to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit market's operational landscape through enhanced data speed and reduced manual processes.