In a significant move to transform the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round in Fence, a startup dedicated to developing software for the operational layer of structured credit deals. The round also saw participation from Parafi Capital and Crane Ventures. Fence aims to tackle the traditionally fragmented and manual workflows in the industry, which often rely on spreadsheets, PDFs, and email, by introducing a unified system that provides real-time data updates. According to Juan Montero, co-founder and CEO of Fence, this approach enables lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports.
By streamlining these processes, Fence seeks to reduce costs for major asset managers and has already reported positive outcomes in deals with BBVA, one of Spain's largest banks. The company utilizes blockchain as a back-end solution, employing smart contracts to manage cash, collateral, and deal terms without necessitating the use of tokens or crypto wallets for its clients. This method allows for the automation of tasks such as data checks and payment releases, significantly reducing the time typically spent on these processes. Fence can also tokenize lender positions and underlying assets when beneficial, facilitating the transfer of positions, borrowing against them, or automatic payment upon changes in ownership.
With this funding, Fence plans to expand its operations in the U.S. and further develop its product, driven by the conviction that enhanced data speed and reduced manual steps can fundamentally change the operation of credit markets.