Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a startup developing software to modernize the operational layer of structured credit deals. This layer, which encompasses tasks such as tracking loan pools, verifying collateral, and managing cash flows, is often fragmented and reliant on outdated methods like spreadsheets, PDFs, and email. Fence aims to replace these inefficient processes with a unified system that provides real-time updates, 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 collaborations with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and decreased operational workload while tracking large volumes of loans. Fence utilizes blockchain technology as back-end infrastructure, rather than a front-end product, to manage cash, collateral, and deal terms. By leveraging smart contracts and APIs, Fence can automate tasks such as data verification and payment processing, reducing the time it takes for loan data to be checked and payments to be cleared. 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 when 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's operations through faster data processing and reduced manual steps.