In a significant move to overhaul 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 that utilizes blockchain technology to create a more efficient and transparent market. The round also included investments from Parafi Capital and Crane Ventures. Fence is developing software to handle the operational layer of structured credit deals, which is often fragmented and reliant on manual workflows, spreadsheets, and email.
By replacing these processes with a single, real-time system, Fence aims to reduce costs and increase visibility for investors. According to Juan Montero, co-founder and CEO of Fence, the company's approach can provide lenders with continuous monitoring of loan performance and cash flows, rather than relying on periodic reports. This can result in lower funding costs for borrowers and reduced operational work for big asset managers. Fence's use of blockchain is focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms, rather than pitching tokens or crypto wallets to banks and asset managers.
The company has already seen success in deals with BBVA, one of Spain's largest banks, and currently oversees approximately $1.5 billion in assets across its platform, working with firms such as BlackRock and Fortress. With the new funding, Fence plans to expand its presence in the U.S.
and further develop its product, with the goal of reshaping the credit market through faster data and reduced manual steps.