A recent $20 million funding round, spearheaded by Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, is supporting Fence's mission to utilize blockchain technology to revamp the $6 trillion asset-backed finance market. This market, where many transactions still rely on manual workflows, is ripe for disruption. The funding round, which also included investments from Parafi Capital and Crane Ventures, will be used to further develop Fence's software, designed to streamline the operational aspects of structured credit deals.
This operational layer, which encompasses tasks such as tracking loan pools, verifying collateral, and managing cash flows, is often fragmented across multiple firms and reliant on outdated methods like spreadsheets, PDFs, and email. As a result, transactions can be slowed, and investors may have limited visibility into the assets backing their investments.
Fence aims to replace these inefficient processes with a unified system that provides real-time updates, enabling lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports. According to Juan Montero, co-founder and CEO of Fence, this approach can significantly reduce costs for large asset managers. In collaborations with BBVA, one of Spain's largest banks, overseeing $800 billion in assets, Fence has reported lower funding costs for borrowers and reduced operational workload, while successfully tracking large volumes of loans on an ongoing basis. Unlike other companies, Fence utilizes blockchain technology as a back-end solution, rather than a front-end product.
The company does not focus on promoting tokens or crypto wallets to banks and asset managers. Instead, it employs smart contracts behind the scenes to manage cash, collateral, and the rules governing these deals. In a typical facility, lenders may experience delays of several days while waiting for loan data to be verified, reports to be sent, and payments to clear.
Fence streamlines this process by pulling information through APIs, running checks in software, and using smart contracts to release cash when deal terms are met. Additionally, the company 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, tokenization is only used when it adds significant value. As Montero emphasized, 'We don't want to be seen as a blockchain company. We're building the infrastructure for the capital markets. Others digitize the paperwork.
Fence rebuilt the plumbing.' Currently, Fence oversees approximately $1.5 billion in assets across its platform, working with prominent firms like BlackRock and Fortress. The company can onboard new deals in a matter of weeks, compared to the months required by standard processes.
The funding will enable Fence to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit markets through faster data and reduced manual steps.