A recent $20 million investment round, spearheaded by Galaxy Ventures, aims to revolutionize the $6 trillion asset-backed finance market by integrating blockchain technology. This market, where many transactions still rely on manual processes, is poised for disruption. Fence, the recipient of the funding, is developing software to manage the operational aspects of structured credit deals.
The current system, which involves tracking loan pools, verifying collateral, and facilitating cash movement, is often fragmented and reliant on outdated tools such as spreadsheets, PDFs, and email. This can lead to slowed transactions and limited visibility for investors. Fence seeks to replace these processes with a unified system that provides real-time data 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. The company claims that this can result in reduced costs for major asset managers. In partnership with BBVA, a prominent Spanish bank overseeing $800 billion in assets, Fence has reported lower funding costs for borrowers and decreased operational workload while tracking large volumes of loans.
Fence utilizes blockchain as a back-end solution, rather than a front-end product. The company does not promote tokens or crypto wallets to banks and asset managers.
Instead, it employs smart contracts to manage cash, collateral, and deal terms. In a typical facility, lenders may experience delays of several days for loan data verification, report generation, and payment clearance. 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.
The company can also tokenize lender positions in financing vehicles and, in some cases, the underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or automatic payment upon ownership changes. However, tokenization is only used when it adds value. As Montero stated, '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.' The company currently oversees approximately $1.5 billion in assets across its platform, working with firms such as BlackRock and Fortress.
It can onboard new deals in a matter of weeks, compared to months under standard processes. The funding will enable the company to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit market through faster data processing and reduced manual steps.