Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup seeking to transform the $6 trillion asset-backed finance market by leveraging blockchain technology. The investment, which also included Parafi Capital and Crane Ventures, aims to support Fence's development of software that handles the operational aspects of structured credit deals. Currently, many of these deals rely on manual workflows, involving fragmented processes across multiple firms, and often utilizing outdated tools such as spreadsheets, PDFs, and email.
This can lead to slowed transactions and limited visibility for investors into the assets backing their investments. Fence's solution involves creating a single system that updates data in real-time, enabling lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports.
According to Juan Montero, co-founder and CEO of Fence, this approach can significantly reduce costs for large asset managers. In collaborations with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and reduced operational work, while effectively tracking large volumes of loans. Fence'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 as a front-end product.
By pulling information through APIs, running checks in software, and using smart contracts to release cash when deal terms are met, Fence can streamline the process, reducing wait times from days to near real-time. The company can also tokenize lender positions in financing vehicles and underlying loans or invoices, allowing for the transfer of positions, borrowing against them, or automatic payment upon changes in ownership. However, tokenization is only used 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 market through faster data processing and reduced manual steps. Currently, Fence oversees approximately $1.5 billion in assets across its platform, working with notable firms such as BlackRock and Fortress, and can onboard new deals in weeks, compared to the months required by standard processes.