Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup focused on transforming the operational layer of structured credit deals using blockchain technology. This investment aims to overhaul the $6 trillion asset-backed finance market, which still heavily relies on manual processes.
The funding round also included participation from Parafi Capital and Crane Ventures. Fence is developing software to streamline the handling of loan pools, collateral verification, and cash movement, processes that are often fragmented and reliant on outdated methods such as spreadsheets, PDFs, and email.
According to Juan Montero, co-founder and CEO of Fence, the company seeks to replace these inefficient processes with a unified system that provides real-time data updates. This approach enables lenders to continuously monitor loan performance and cash flows, rather than depending on periodic reports. Fence claims that its method can significantly reduce costs for major asset managers.
In collaboration with BBVA, one of Spain's largest banks with $800 billion in assets under management, Fence has reportedly achieved lower funding costs for borrowers and decreased operational workload while tracking large volumes of loans. The company utilizes blockchain technology as a back-end solution, employing smart contracts to manage cash, collateral, and deal terms without promoting tokens or crypto wallets to banks and asset managers.
By integrating APIs, software checks, and smart contracts, Fence can expedite the process of loan data verification, report generation, and payment clearance. Additionally, the company can tokenize lender positions in financing vehicles and underlying loans or invoices, facilitating the transfer of positions, borrowing against them, or automatic payment upon ownership changes.
However, tokenization is only applied where it adds value. Montero emphasized that Fence's primary focus is on building infrastructure for capital markets, rather than being perceived as a blockchain company.
The company has reportedly overseen approximately $1.5 billion in assets across its platform, collaborating with firms such as BlackRock and Fortress, and can onboard new deals in weeks, compared to the standard process which takes months. The funding is expected to support Fence's expansion in the U.S. and further development of its product, with the goal of reshaping credit market operations through faster data processing and reduced manual steps.