Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup focused on transforming the $6 trillion asset-backed finance market by harnessing blockchain technology. This market, where many transactions still rely on manual workflows, is poised for disruption. The funding round, which also included investments from Parafi Capital and Crane Ventures, will support Fence's mission to streamline the operational layer of structured credit deals.
Currently, this layer is often fragmented and reliant on outdated methods such as spreadsheets, PDFs, and email, leading to slowed transactions and limited visibility for investors. Fence aims to replace these inefficient processes with a unified system that provides real-time data updates. 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 potential of its approach in deals with BBVA, one of Spain's largest banks, overseeing $800 billion in assets. By leveraging blockchain as back-end infrastructure rather than a front-end product, Fence manages cash, collateral, and deal terms using smart contracts, thereby enhancing the efficiency and transparency of transactions. Unlike traditional methods, which may take days to process loan data and payments, Fence's system can pull information through APIs, run checks in software, and use smart contracts to release cash when deal terms are met.
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 payments automatically. However, tokenization is only utilized where it adds value. With this funding, Fence plans to expand its presence in the U.S. and further develop its product, with the goal of reshaping the credit markets by reducing manual steps and increasing data speed.
Currently, Fence oversees approximately $1.5 billion in assets across its platform, working with prominent firms such as BlackRock and Fortress, and can onboard new deals in weeks, a significant improvement over the months required by standard processes.