Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup seeking to transform the $6 trillion asset-backed finance market by harnessing blockchain technology. The investment, which also included Parafi Capital and Crane Ventures, aims to support Fence's development of software that handles the operational aspects of structured credit deals. Currently, many of these processes are fragmented across multiple firms and rely on outdated methods such as spreadsheets, PDFs, and email, resulting in slower transactions and limited visibility for investors. Fence's platform seeks to replace these manual workflows with a single, real-time system.
According to Juan Montero, co-founder and CEO of Fence, this approach can significantly reduce costs for major asset managers. In partnership with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and reduced operational work while tracking large volumes of loans. The company utilizes blockchain as a back-end solution, employing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets as a front-end product.
By leveraging APIs, software checks, and smart contracts, Fence can expedite the processing of loan data, reports, and payments. The company can also tokenize lender positions in financing vehicles and underlying loans or invoices, enabling investors to transfer positions, borrow against them, or receive automatic payments in the event of ownership changes.
However, tokenization is only used where it adds value. As Montero emphasized, 'We don't want to be seen as a blockchain company; we're building the infrastructure for the capital markets.' Fence currently oversees approximately $1.5 billion in assets across its platform, working with prominent firms such as BlackRock and Fortress, and can onboard new deals in a matter of weeks. The funding is expected to support the company's expansion in the U.S.
and further development of its product, with the goal of reshaping the credit markets through faster data processing and reduced manual steps.