In a significant move to transform the $6 trillion asset-backed finance market, Galaxy Ventures, the venture capital arm of Galaxy Digital, has led a $20 million funding round in Fence, a startup dedicated to developing software for the operational layer of structured credit deals. This investment, which also included Parafi Capital and Crane Ventures, aims to utilize blockchain technology to overhaul the traditional manual workflows that dominate the industry. Fence's software seeks to replace fragmented and outdated processes, such as tracking loan pools, verifying collateral, and managing cash flows, with a single, unified system that provides real-time updates.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 solution can significantly reduce costs for major asset managers, as evidenced by its partnership with BBVA, one of Spain's largest banks, which has resulted in lower funding costs for borrowers and reduced operational work. Notably, Fence's use of blockchain technology is focused on back-end processes, utilizing smart contracts to manage cash, collateral, and deal terms, rather than promoting tokens or crypto wallets as a front-end product. By streamlining these processes, Fence can facilitate faster transactions, enhance transparency, and provide investors with greater visibility into the assets backing their investments.
The company's platform currently oversees approximately $1.5 billion in assets, with a client base that includes prominent firms such as BlackRock and Fortress. With this funding, Fence plans to expand its operations in the U.S. and further develop its product, with the goal of reshaping the credit markets through the adoption of more efficient, automated workflows.