A recent $20 million funding round, spearheaded by Galaxy Ventures, the venture capital arm of Galaxy Digital, aims to transform the $6 trillion asset-backed finance market by harnessing the power of blockchain technology. Fence, the recipient of this investment, is a startup dedicated to developing software that streamlines the operational aspects of structured credit deals.
The current system, which relies heavily on manual workflows, spreadsheets, and email, can lead to slower transactions and limited visibility for investors. Fence seeks to replace these outdated processes with a unified system that provides real-time updates, enabling lenders to continuously monitor loan performance and cash flows. This approach has the potential to significantly reduce costs for major asset managers. In collaborations with BBVA, one of Spain's largest banks, Fence has demonstrated 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. By leveraging APIs, software checks, and smart contracts, Fence can expedite the release of cash, eliminating the need for prolonged waiting periods. Additionally, the company can tokenize lender positions, allowing for seamless transfers, borrowing, and payments.
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 enhanced data processing and reduced manual steps.