In a significant move to overhaul 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 developing software to streamline 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 traditionally fragmented and manual processes used in tracking loan pools, verifying collateral, and managing cash flows with a single, real-time system.
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 reducing costs. The company has already demonstrated the potential of its approach in deals with BBVA, one of Spain's largest banks, where it reported lower funding costs for borrowers and reduced operational work.
Fence utilizes blockchain as a back-end solution, employing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets as a front-end product. By pulling information through APIs, running checks in software, and using smart contracts to release cash when deal terms are met, Fence can significantly reduce the time lenders spend waiting for loan data to be checked and payments to clear. The company can also 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, tokenization is only used where it adds value. With this 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 and fewer manual steps. Currently, the company oversees approximately $1.5 billion in assets across its platform, working with notable firms such as BlackRock and Fortress, and can onboard new deals in weeks, a significant improvement over the standard processes that typically take months.