In a significant move to transform the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup dedicated to developing software for the operational layer of structured credit deals. The round also saw participation from Parafi Capital and Crane Ventures. Fence's software aims to replace the fragmented and manual processes currently used in the market, which often involve tracking loan pools, verifying collateral, and moving cash across multiple firms using spreadsheets, PDFs, and email.

This outdated setup can slow down transactions and limit investor visibility into the assets backing their investments. According to Juan Montero, co-founder and CEO of Fence, the company's system updates data in real-time, allowing lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports.

Fence claims that its approach can reduce costs for major asset managers, citing its work with BBVA, one of Spain's largest banks, which has overseen $800 billion in assets. The company has reported lower funding costs for borrowers and reduced operational work while tracking large volumes of loans on an ongoing basis. Fence utilizes blockchain technology as back-end infrastructure, rather than as a front-end product, using smart contracts to manage cash, collateral, and deal terms behind the scenes.

This approach enables the company to pull information through APIs, run checks in software, and release cash when deal terms are met, significantly reducing the time it takes for loan data to be checked, reports to be sent, and payments to clear. Additionally, Fence can tokenize lender positions in financing vehicles and, in some cases, the underlying loans or invoices, allowing investors to transfer positions, borrow against them, or receive payments automatically if ownership changes.

However, Montero emphasized that tokenization is only used where it adds value. The company currently oversees around $1.5 billion in assets across its platform, working with firms such as BlackRock and Fortress, and can onboard new deals in weeks, compared to months under standard processes. The funding is expected to help Fence expand in the U.S.

and build out its product, with the goal of reshaping how credit markets operate behind the scenes through faster data and fewer manual steps.