In a significant move to transform the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup dedicated to developing software for the operational layer of structured credit deals. The round also saw participation from Parafi Capital and Crane Ventures.

Fence's primary objective is to replace the traditionally fragmented and manual processes, often reliant on spreadsheets, PDFs, and email, with a unified system that provides real-time data updates. According to Juan Montero, co-founder and CEO of Fence, this approach enables lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports. The company claims that this method can significantly reduce costs for major asset managers.

In collaboration with BBVA, one of Spain's largest banks with $800 billion in assets, Fence has reportedly achieved lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans. Fence utilizes blockchain technology as back-end infrastructure, rather than as 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 loan data verification process, reducing the waiting time from days to near real-time.

The company can also tokenize lender positions in financing vehicles and underlying loans or invoices, facilitating the transfer of positions, borrowing, or automatic payment upon ownership changes. However, tokenization is only employed where it adds significant 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.' Currently, Fence oversees approximately $1.5 billion in assets across its platform, working with prominent firms like BlackRock and Fortress, and can onboard new deals in weeks, compared to months under traditional processes. The funding is expected to support the company's expansion in the U.S.

and further develop its product, with the goal of reshaping the credit market's operational processes through faster data and reduced manual steps.