Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup aiming to transform the $6 trillion asset-backed finance market by utilizing blockchain technology behind the scenes. The round also included investments from Parafi Capital and Crane Ventures. Fence is developing software to handle the operational aspects of structured credit deals, an area often fragmented across multiple firms and reliant on outdated methods such as spreadsheets, PDFs, and email. This setup can lead to slowed transactions and limited visibility for investors into the assets backing their investments.
According to Juan Montero, co-founder and CEO of Fence, the company seeks to replace these processes with a unified system that 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 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 reduced operational workload while tracking large volumes of loans on an ongoing basis. Unlike many blockchain-based solutions, Fence uses blockchain as back-end infrastructure rather than a front-end product, managing cash, collateral, and deal rules through smart contracts without emphasizing tokens or crypto wallets to its clients. In a typical facility, lenders may experience delays of several days for loan data verification, report generation, and payment clearance.
Fence streamlines this process by pulling information through APIs, running checks in software, and utilizing smart contracts to release cash when deal terms are met. Additionally, Fence can tokenize lender positions in financing vehicles and, in some cases, the underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or automatic payment upon ownership changes, though tokenization is only applied where it adds value. Montero emphasized that Fence's focus is on building infrastructure for capital markets, distinct from companies that merely digitize paperwork.
The company currently oversees approximately $1.5 billion in assets across its platform, working with firms like BlackRock and Fortress, and can onboard new deals in weeks, a significant reduction from the months required by standard processes. The funding is expected to support Fence's expansion in the U.S. and further development of its product, with the goal of reshaping credit market operations through faster data processing and reduced manual steps.