Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round for Fence, a startup dedicated to transforming the $6 trillion asset-backed finance market. The investment, which also included Parafi Capital and Crane Ventures, aims to utilize blockchain technology to streamline the operational aspects of structured credit deals.
Currently, many of these processes are fragmented, relying on manual workflows, spreadsheets, and email, which can slow down transactions and limit investor visibility. Fence seeks to replace these outdated methods with a unified system that provides real-time data updates.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. The company claims that its approach can significantly reduce costs for major asset managers.
In partnership with BBVA, one of Spain's largest banks, Fence has reported lower funding costs for borrowers and reduced operational workload while tracking large volumes of loans. Fence's use of blockchain is primarily focused on back-end operations, utilizing smart contracts to manage cash, collateral, and deal terms. This allows for faster and more efficient transactions, with the potential to tokenize lender positions and underlying assets. The company's goal is to provide the infrastructure for the capital markets, rather than simply being a blockchain company.
With the new funding, Fence plans to expand its operations in the U.S. and further develop its product, with the potential to reshape the credit market's behind-the-scenes operations.