A recent $20 million funding round, spearheaded by Galaxy Ventures, is set to transform the $6 trillion asset-backed finance market by leveraging blockchain technology to streamline processes. The investment, which also included contributions from Parafi Capital and Crane Ventures, will support Fence, a startup focused on developing software for the operational layer of structured credit deals. This layer, encompassing tasks such as tracking loan pools, verifying collateral, and managing cash flows, is often fragmented and reliant on outdated methods like spreadsheets, PDFs, and email. Fence aims to replace these inefficient processes with a unified system that provides real-time updates, enabling lenders to continuously monitor loan performance and cash flows.
According to Juan Montero, co-founder and CEO of Fence, this approach can significantly reduce costs for major asset managers. In collaborations with BBVA, one of Spain's largest banks, overseeing $800 billion in assets, Fence has successfully decreased funding costs for borrowers and minimized operational workload while tracking large volumes of loans.
The company's use of blockchain is primarily focused on back-end infrastructure, 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 expedite the processing of loan data, reports, and payments, which typically takes days.
The company can also tokenize lender positions in financing vehicles and underlying loans or invoices, facilitating the transfer of positions, borrowing, or automatic payments in the event of ownership changes. However, tokenization is only employed where 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 enhanced data processing and reduced manual steps. Currently, the company oversees approximately $1.5 billion in assets across its platform, working with prominent firms like BlackRock and Fortress, and can onboard new deals in a matter of weeks, compared to the standard process which takes months.