A recent $20 million funding round, spearheaded by Galaxy Ventures, the venture capital division of Mike Novogratz's Galaxy Digital, is supporting Fence's endeavor to harness blockchain technology to transform the $6 trillion asset-backed finance market. This market currently relies heavily on manual processes, which can hinder transactions and limit investor visibility into underlying assets. Fence, a startup focused on developing software for the operational aspects of structured credit deals, aims to replace these fragmented and outdated processes with a unified system that provides real-time updates.
According to Juan Montero, co-founder and CEO of Fence, this approach enables lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports. The company claims that its approach can significantly reduce costs for major asset managers. In partnership with BBVA, one of Spain's largest banks with $800 billion in assets under management, Fence has reported lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans.
Fence utilizes blockchain as a backend infrastructure, rather than a frontend product, to manage cash, collateral, and deal terms. The company's software pulls data through APIs, runs checks, and uses smart contracts to release funds when deal terms are met. Additionally, Fence can tokenize lender positions in financing vehicles and underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or automatic payment upon ownership changes. However, tokenization is only used when it adds value.
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 market's backend operations through faster data processing and reduced manual steps.