Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup developing software to modernize the operational layer of structured credit deals. This layer, which encompasses tasks such as tracking loan pools, verifying collateral, and managing cash flows, is often fragmented and reliant on outdated methods like spreadsheets, PDFs, and email.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 collaborations with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and decreased operational workload while tracking large volumes of loans. Rather than focusing on front-end blockchain applications, Fence utilizes blockchain as back-end infrastructure, employing smart contracts to manage cash, collateral, and deal terms.
This approach allows for the automation of tasks such as data checks and payment releases, reducing the time spent on these processes from days to near real-time. Additionally, Fence can tokenize lender positions in financing vehicles and underlying assets, facilitating the transfer of positions, borrowing against them, or automatic payment upon changes in ownership. With this funding, Fence plans to expand its presence in the U.S. and further develop its product, with the goal of transforming the credit market's infrastructure through faster data processing and reduced manual steps.