A recent $20 million funding round, spearheaded by Galaxy Ventures, the venture capital arm of Galaxy Digital, aims to transform the $6 trillion asset-backed finance market by harnessing the power of blockchain technology. Fence, the recipient of the funding, is a startup that has developed software to manage the operational aspects of structured credit deals. This layer, which encompasses tracking loan pools, verifying collateral, and facilitating cash movement, is often fragmented and reliant on outdated methods such as spreadsheets, PDFs, and email.
Fence seeks to replace these processes 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.
The company has already demonstrated the efficacy of its approach in deals with BBVA, one of Spain's largest banks, overseeing $800 billion in assets. By leveraging blockchain technology as back-end infrastructure, Fence streamlines cash management, collateral verification, and deal governance.
In a typical facility, lenders often wait days for loan data to be verified, reports to be generated, and payments to be processed. Fence expedites this process by leveraging APIs, software checks, and smart contracts to release cash when deal terms are met. The company can also tokenize lender positions in financing vehicles and, in certain cases, the underlying loans or invoices, facilitating the transfer of positions, borrowing against them, or automatic payment upon ownership changes. However, Montero emphasizes that tokenization is only employed where it adds tangible value.
With the new funding, Fence plans to expand its presence in the U.S. and further develop its product, driven by the conviction that enhanced data efficiency and reduced manual steps can fundamentally transform the operation of credit markets.