Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup aiming to transform the $6 trillion asset-backed finance market by harnessing blockchain technology behind the scenes. The round also included investments from Parafi Capital and Crane Ventures. Fence is developing software to manage the operational aspects of structured credit deals, an area often plagued by fragmentation and reliance on outdated methods such as spreadsheets, PDFs, and email.
This setup can impede transactions and limit investor visibility into the assets backing their investments. According to Juan Montero, co-founder and CEO of Fence, the company seeks to replace these inefficient processes with a unified system that provides real-time data updates. This approach enables lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports.
Fence claims that its method can reduce costs for major asset managers, citing its work with BBVA, one of Spain's largest banks, which oversees $800 billion in assets. The company has reported lower funding costs for borrowers and decreased operational workload while tracking large volumes of loans on an ongoing basis. Unlike many blockchain-based solutions, Fence utilizes blockchain as back-end infrastructure rather than a front-end product.
The company focuses on using smart contracts to manage cash, collateral, and the rules governing these deals, rather than promoting tokens or crypto wallets to banks and asset managers. In a typical facility, lenders may experience delays of several days for loan data to be verified, reports to be sent, and payments to be cleared.
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. Additionally, the company can 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, tokenization is only employed 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. 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, and can onboard new deals in weeks, compared to months under standard processes. The funding will be used to expand the company's presence in the U.S. and further develop its product, with the goal of reshaping the credit markets through faster data and reduced manual steps.