A recent $20 million funding round, spearheaded by Galaxy Ventures, is poised to revolutionize the $6 trillion asset-backed finance market by harnessing blockchain technology to overhaul its back-end operations. Fence, the recipient of this investment, is a startup dedicated to developing software solutions for the operational aspects of structured credit deals. The current system, which relies heavily on manual workflows, spreadsheets, and email, can lead to slowed transactions and limited visibility for investors.
Fence aims to replace this fragmented process with a unified system that provides real-time updates, 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 collaboration 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. Rather than utilizing blockchain as a front-end product, Fence employs it as back-end infrastructure, using smart contracts to manage cash, collateral, and deal terms.
This approach enables the company to pull information through APIs, conduct checks in software, and release cash when deal terms are met, thereby streamlining the process. Fence can also tokenize lender positions in financing vehicles and underlying loans or invoices, allowing investors to transfer positions, borrow against them, or receive payments automatically. With this funding, the company plans to expand its operations in the U.S. and further develop its product, with the goal of reshaping the credit market's back-end operations through faster data processing and reduced manual steps.