In a significant move to modernize 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 focused on developing software for the operational layer of structured credit deals. The round also saw participation from Parafi Capital and Crane Ventures. Fence's platform aims to replace the traditionally fragmented and manual processes used in tracking loan pools, verifying collateral, and managing cash flows with a single, 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, thereby enhancing visibility and efficiency. The company claims that its solution can reduce costs for major asset managers, as evidenced by its work with BBVA, one of Spain's largest banks, overseeing $800 billion in assets.
In these deals, Fence reported lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans. Notably, Fence utilizes blockchain technology as back-end infrastructure rather than a front-end product, employing smart contracts to manage cash, collateral, and deal terms without requiring banks and asset managers to engage with tokens or crypto wallets.
By automating processes and reducing the reliance on spreadsheets, PDFs, and email, Fence can significantly speed up transactions and provide investors with greater insights into the assets backing their investments. The company has already made significant strides, overseeing approximately $1.5 billion in assets across its platform and working with prominent firms such as BlackRock and Fortress. With the new funding, Fence plans to expand its operations in the U.S.
and further develop its product, with the goal of reshaping the credit markets through faster data processing and reduced manual steps.