In a significant move to transform the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup dedicated to streamlining the operational layer of structured credit deals. The investment, which also included Parafi Capital and Crane Ventures, aims to overhaul the traditional manual workflows that dominate the industry. Fence's innovative approach involves developing software to handle the intricate processes involved in tracking loan pools, verifying collateral, and facilitating cash movements.
By replacing fragmented and outdated systems with a unified, real-time data platform, Fence seeks to increase transaction speed and provide investors with unparalleled visibility into the assets backing their investments. According to Juan Montero, co-founder and CEO of Fence, the company's solution can significantly reduce costs for major asset managers.
In collaboration with BBVA, one of Spain's largest banks, overseeing $800 billion in assets, Fence has successfully demonstrated lower funding costs for borrowers and reduced operational work while tracking large volumes of loans. Notably, Fence utilizes blockchain technology as a back-end infrastructure, rather than a front-end product, to manage cash, collateral, and deal terms efficiently. By leveraging smart contracts and APIs, Fence can accelerate the flow of information, automate checks, and release cash when deal terms are met, thereby reducing the waiting time for lenders. Furthermore, the company can tokenize lender positions in financing vehicles and underlying loans or invoices, enabling investors to transfer positions, borrow against them, or receive payments automatically.
With this funding, Fence plans to expand its presence in the U.S. and enhance its product offerings, with the goal of reshaping the credit markets through faster data processing and minimized manual steps.
Currently, Fence oversees approximately $1.5 billion in assets across its platform, working with prominent firms such as BlackRock and Fortress, and can onboard new deals in a matter of weeks, compared to the standard process which takes months.