Galaxy Ventures, the venture capital division of Galaxy Digital, has led a $20 million funding round for Fence, a startup dedicated to transforming the $6 trillion asset-backed finance market by harnessing blockchain technology to automate back-end processes. This market, where many transactions still rely on manual workflows, is poised for disruption. The funding round, which also included investments from Parafi Capital and Crane Ventures, will support Fence's mission to develop software that handles the operational aspects of structured credit deals, a layer that is often fragmented and reliant on outdated tools such as spreadsheets, PDFs, and email. According to Juan Montero, co-founder and CEO of Fence, the company aims to replace these inefficient processes with a unified system that provides real-time data updates, enabling lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports.
This approach has the potential to significantly reduce costs for major asset managers. In partnership with BBVA, one of Spain's largest banks with $800 billion in assets under management, Fence has demonstrated lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans. Notably, Fence utilizes blockchain as a back-end infrastructure, rather than a front-end product, employing smart contracts to manage cash, collateral, and deal terms without promoting tokens or crypto wallets to banks and asset managers.
By leveraging APIs, software checks, and smart contracts, Fence can accelerate the processing of loan data, reports, and payments, which typically takes days. The company can also tokenize lender positions and underlying assets, facilitating the transfer of positions, borrowing, or automatic payments in the event of ownership changes.
However, tokenization is only used when it adds value. With approximately $1.5 billion in assets under its platform, working with firms like BlackRock and Fortress, Fence can onboard new deals in weeks, compared to months using standard processes. The new funding will enable the company to expand its presence in the U.S. and further develop its product, driven by the conviction that enhanced data speed and reduced manual steps can fundamentally reshape the operation of credit markets.