In a significant funding round, Galaxy Ventures, the venture capital arm of Galaxy Digital, has invested $20 million in Fence, a startup dedicated to transforming the $6 trillion asset-backed finance market. This market, which still relies heavily on manual workflows, is poised for a major overhaul.
The funding round, which also included investments from Parafi Capital and Crane Ventures, will support Fence's mission to develop software that streamlines the operational aspects of structured credit deals. Currently, the process of tracking loan pools, verifying collateral, and managing cash flows is often fragmented and reliant on outdated methods such as spreadsheets, PDFs, and email.
Fence aims to replace these inefficient 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.
In collaboration with BBVA, one of Spain's largest banks, Fence has successfully decreased funding costs for borrowers and minimized operational workload while tracking large volumes of loans. Unlike other companies, Fence utilizes blockchain technology as a behind-the-scenes solution, rather than a front-end product.
The company focuses on using smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets to banks and asset managers. By leveraging APIs, software checks, and smart contracts, Fence can accelerate the processing of loan data, reports, and payments.
Additionally, the company can 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 employed when it adds value to the process. As Montero emphasized, 'We don't want to be seen as a blockchain company.
We're building the infrastructure for the capital markets.' Fence has already made significant progress, overseeing approximately $1.5 billion in assets across its platform, and collaborating with prominent firms such as BlackRock and Fortress. The company can onboard new deals in a matter of weeks, compared to the months required by standard processes. With the newly secured funding, Fence plans to expand its operations in the U.S.
and further develop its product, with the goal of reshaping the credit markets through faster data processing and reduced manual steps.