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 in Fence, a startup focused on developing software for the operational layer of structured credit deals. The round also saw participation from Parafi Capital and Crane Ventures. Fence's software aims to handle the operational aspects of structured credit deals, including tracking loan pools, verifying collateral, and managing cash flows, which are often fragmented across multiple firms and reliant on manual workflows, spreadsheets, PDFs, and email.
This setup can lead to slower transactions and limited visibility for investors into the assets backing their investments. According to Juan Montero, co-founder and CEO of Fence, the company's system updates data in real-time, enabling lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports. Fence claims that its approach can reduce costs for large asset managers, as evidenced by its work with BBVA, one of Spain's largest banks, which oversees $800 billion in assets.
The company reported lower funding costs for borrowers and reduced operational work while tracking large volumes of loans on an ongoing basis. Fence is leveraging blockchain technology as back-end infrastructure, utilizing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets as a front-end product. In a typical facility, lenders may wait days for loan data to be checked, 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. The company can also 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, Montero emphasized that tokenization is only used where it adds value.
Fence currently oversees approximately $1.5 billion in assets across its platform, working with firms such as BlackRock and Fortress, and can onboard new deals in weeks, compared to months under standard processes. The funding is expected to help the company expand in the U.S.
and build out its product, with the goal of reshaping the credit markets through faster data and fewer manual steps.