Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup focused on transforming the $6 trillion asset-backed finance market by harnessing the power of blockchain technology. This market, where many transactions still rely on manual workflows, is ripe for disruption. The funding round, which also included investments from Parafi Capital and Crane Ventures, will support Fence's development of software designed to handle the operational aspects of structured credit deals.
Currently, these processes are often fragmented and reliant on outdated methods such as spreadsheets, PDFs, and email, leading to slowed transactions and limited visibility for investors. Fence aims to replace these inefficient processes with a unified system that provides real-time data updates, 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 significantly reduce costs for major asset managers.
In collaboration with BBVA, one of Spain's largest banks with $800 billion in assets under management, Fence has demonstrated the ability to lower funding costs for borrowers and decrease operational workload while tracking large volumes of loans. Unlike many blockchain-based solutions, Fence utilizes blockchain as back-end infrastructure rather than a front-end product.
The company focuses on using smart contracts to manage cash, collateral, and deal terms behind the scenes, rather than promoting tokens or crypto wallets to banks and asset managers. This approach enables Fence to streamline processes such as loan data verification, report generation, and payment clearance, which can take days in traditional facilities. By leveraging APIs, software checks, and smart contracts, Fence can release cash when deal terms are met, significantly enhancing the efficiency of these transactions.
Additionally, Fence can tokenize lender positions in financing vehicles and, in some cases, the underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or automatic payment upon changes in ownership. However, tokenization is only employed where it adds tangible 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 is rebuilding the plumbing.' With approximately $1.5 billion in assets under management across its platform, working with prominent firms like BlackRock and Fortress, Fence is poised to expand its presence in the U.S.
and further develop its product offerings, driven by the conviction that enhanced data speed and reduced manual steps can fundamentally reshape the operational landscape of credit markets.