A recent $20 million funding round, spearheaded by Galaxy Ventures, the venture capital arm of Galaxy Digital, aims to transform the $6 trillion asset-backed finance market by harnessing blockchain technology. The funding, which also included investments from Parafi Capital and Crane Ventures, will support Fence, a startup dedicated to developing software for managing the operational aspects of structured credit deals. This operational layer, which encompasses tasks such as tracking loan pools, verifying collateral, and facilitating cash movements, is often fragmented and reliant on outdated methods like spreadsheets, PDFs, and email.
Fence seeks to replace these inefficient processes with a unified system that provides real-time data 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 solution can reduce costs for major asset managers, citing its work with BBVA, one of Spain's largest banks, which oversees $800 billion in assets. Fence's use of blockchain technology is focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets to banks and asset managers.
By leveraging APIs, software checks, and smart contracts, Fence can accelerate the processing of loan data, reports, and payments, which can take days in traditional facilities. The company also has the capability to tokenize lender positions in financing vehicles and underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or automatic payment upon changes in ownership. However, Montero emphasizes that 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 by reducing manual steps and increasing data speed. 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 months required by standard processes.