TL;DR:
Fence, the financial startup that uses blockchain and smart contracts in the back end to automate the structured credit market, raised $20 million in a funding round led by Galaxy Ventures, the venture capital arm of Galaxy Digital, the firm founded by Mike Novogratz. Parafi Capital and Crane Ventures also participated in the round.
The capital raised will be directed toward modernizing an asset-backed finance market valued at $6 trillion that, to a large extent, still relies on spreadsheets, emails and PDF documents to manage operations ranging from loan pool tracking to collateral verification and payment settlement.
Juan Montero, co-founder and CEO of Fence, explained that the system they built allows lenders to monitor loan performance and cash flows in real time, rather than waiting for periodic reports. In practice, that means replacing fragmented processes across multiple firms with a single platform that centralizes and updates information on a continuous basis.
In its work with BBVA, one of Spain’s largest banks managing around $800 billion in assets, Fence reported lower financing costs for borrowers and a significant reduction in operational workload. The company states that it currently oversees approximately $1.5 billion in assets through its platform, and has the capacity to onboard new transactions in weeks, compared to the months that conventional processes require.
The company does not market tokens or crypto wallets to its institutional clients. Smart contracts operate in the back end to automatically release funds when the conditions of each transaction are met, without that being visible to the end user. The tokenization of lender positions or of the loans themselves is only applied where it adds concrete value.
“We don’t want to be seen as a blockchain company. We are building the infrastructure for capital markets,” said Montero. “Others digitize the paperwork. Fence rebuilt the plumbing.”
With the new capital injection, the firm plans to accelerate its expansion in the United States and continue developing its product, on the premise that fewer manual steps and more agile data can redefine how the credit market functions from the inside out.
