Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup seeking to transform the $6 trillion asset-backed finance market by harnessing blockchain technology. The investment, which also included Parafi Capital and Crane Ventures, aims to support Fence's development of software that handles the operational aspects of structured credit deals. Currently, this layer is often fragmented and reliant on outdated methods such as spreadsheets, PDFs, and email, resulting in slowed transactions and limited visibility for investors. Fence's solution involves creating a unified system that updates data in real-time, enabling lenders to continuously monitor loan performance and cash flows.
According to Juan Montero, co-founder and CEO of Fence, this approach has the potential to reduce costs for major asset managers. In collaboration with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and decreased operational work while tracking large volumes of loans. The company utilizes blockchain as a back-end solution, employing smart contracts to manage cash, collateral, and deal terms without promoting tokens or crypto wallets to banks and asset managers.
By leveraging APIs, software checks, and smart contracts, Fence can expedite the release of cash when deal terms are met, significantly reducing the waiting time for loan data verification and payment clearance. Additionally, 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 ownership changes.
However, tokenization is only used when it adds value. With this investment, Fence plans to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit market through faster data processing and reduced manual steps. The company currently 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.