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, where many deals still rely on manual workflows, is set to undergo a significant overhaul with the integration of blockchain technology. The funding round, which also included investments from Parafi Capital and Crane Ventures, will be utilized to develop software that streamlines the operational layer of structured credit deals. Currently, this layer is often fragmented across multiple firms, relying on outdated methods such as spreadsheets, PDFs, and email, which can slow transactions and limit investor visibility.
Fence aims to replace these processes with a single, real-time system, 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 partnerships with banks like BBVA, which oversees $800 billion in assets, Fence has reported lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans. The company's use of blockchain is primarily focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets.
By pulling information through APIs, running checks in software, and using smart contracts to release cash when deal terms are met, Fence can significantly reduce the time it takes for loan data to be checked and payments to clear. Additionally, the company can tokenize lender positions in financing vehicles and underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or receiving automatic payments in the event of ownership changes. However, tokenization is only used when it adds value. With this investment, Fence plans to expand its operations in the U.S.
and further develop its product, with the goal of reshaping the credit market through faster data processing and reduced manual steps. The company currently 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 a matter of weeks, compared to the standard process which takes months.