In a significant move to transform the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Mike Novogratz's 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 funding round, which also included investments from Parafi Capital and Crane Ventures, aims to utilize blockchain technology to overhaul the traditionally manual and fragmented processes that dominate the industry. Fence's innovative approach focuses on creating a unified system that provides real-time updates, enabling lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports.
According to Juan Montero, co-founder and CEO of Fence, this streamlined process can significantly reduce costs for major asset managers. The company has already demonstrated the effectiveness of its approach in deals with BBVA, one of Spain's largest banks, overseeing $800 billion in assets, resulting in lower funding costs for borrowers and reduced operational work. Notably, Fence's use of blockchain technology is primarily focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets as a front-end product.
By leveraging APIs, software checks, and smart contracts, Fence can facilitate faster and more efficient transactions, allowing investors to transfer positions, borrow against them, or receive payments automatically. With this funding, Fence plans to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit markets through faster data and reduced manual steps.