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 transforming the operational layer of structured credit deals. This round, which also included investments from Parafi Capital and Crane Ventures, aims to utilize blockchain technology to streamline the $6 trillion asset-backed finance market.
Currently, many deals in this market rely on manual workflows, resulting in fragmented processes and limited visibility for investors. Fence seeks to replace these outdated processes with a single, real-time system, enabling lenders to continuously monitor loan performance and cash flows. According to Juan Montero, co-founder and CEO of Fence, this approach can significantly reduce costs for major asset managers.
In partnership with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and decreased operational workload while tracking large volumes of loans. The company's use of blockchain is primarily focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms. This approach allows for faster and more efficient transactions, with the potential to tokenize lender positions and underlying assets, enabling easier transfer and borrowing.
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 through increased efficiency and reduced manual steps.