Galaxy Ventures, the venture capital arm of Mike Novogratz's Galaxy Digital, has led a $20 million funding round for Fence, a company aiming to transform the $6 trillion asset-backed finance market by utilizing blockchain technology to automate manual processes. Fence's software focuses on handling the operational aspects of structured credit deals, an area often plagued by fragmentation and reliance on outdated tools like spreadsheets, PDFs, and email.
This outdated setup can lead to slowed transactions and limited visibility for investors. Fence seeks to replace these antiquated processes with a unified system that provides real-time data updates.
According to Juan Montero, Fence's co-founder and CEO, this approach enables lenders to continuously monitor loan performance and cash flows, rather than relying on periodic reports. The company claims its method can significantly reduce costs for major asset managers, as evidenced by its work with BBVA, where it reported lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans. Fence utilizes blockchain as a back-end solution, employing smart contracts to manage cash, collateral, and deal terms without requiring banks and asset managers to adopt tokens or crypto wallets. By integrating APIs and running checks through software, Fence can release cash once deal terms are met, vastly reducing the waiting time for loan data verification, report generation, and payment clearance.
The company can also tokenize lender positions in financing vehicles and, in some cases, the 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 tangible value. Montero emphasized that Fence's primary goal is to build infrastructure for capital markets, rather than being perceived as a blockchain company.
The company has made significant strides, overseeing approximately $1.5 billion in assets across its platform, working with notable firms like BlackRock and Fortress, and capable of onboarding new deals in mere weeks. The recent funding is expected to fuel Fence's expansion in the U.S. and further develop its product, driven by the conviction that enhanced data speed and reduced manual steps can fundamentally reshape the operation of credit markets.