Overstock (NASDAQ:OSTK) has migrated Medici Ventures to a limited partnership while enlisting Pelion Venture Partners to act as the general partner of the fund. Medici oversees a number of blockchain-focused ventures including tZero. Overstock will be a limited partner in the fund.
Shares in Overstock jumped in after-hours trading following the news. Investors may be encouraged that Overstock will now be able to focus on its core mission of excelling in the eCommerce sector.
Jonathan Johnson, CEO of Overstock, issued the following statement:
“Blockchain technology represents a leap forward in fundamentally changing the way we interact and transact with each other. Since 2014, we have made investments in and advocated on behalf of companies advancing blockchain technology. We remain bullish on blockchain technology but are changing the way we interact with these assets. As we evaluated how to create the highest return for our shareholders, we determined it is time to partner with a seasoned venture capital firm to oversee the portfolio and make follow-on investment decisions. Pelion is the perfect firm to do this. It has blockchain and technology expertise with early-stage companies and has helped guide many companies to economic success.”
Pelion Ventures founder and general partner Blake Modersitzki stated:
“We are honored Overstock selected us to maximize the value of its blockchain assets. Many of these companies have real potential. We believe our team knows how to help them reach that potential.”
After closing, the Pelion entity will have sole authority and responsibility regarding investing decisions, appointing board members of the portfolio companies, and exercising all shareholder rights for assets Medici Ventures currently holds. The Fund is expected to have an eight-year life and a total capital commitment of $45 million. The Fund will return invested capital to Overstock first and then split profits on successful exits as set forth in the Fund’s Limited Partnership Agreement. The Fund will hold a significant minority ownership stake in tZERO Group, Inc. and Overstock will retain a direct minority equity interest in tZERO.
Johnson said they have been looking for a way to maximize the value of these assets for shareholders.
Medici Ventures will discontinue providing software development and design services to its portfolio companies. Overstock said it will continue to accept Bitcoin as a form of payment for products purchased on its website.
To further discuss the impact of this decision, a conference call and webcast has been scheduled for 8:30am ET on Tuesday, January 26, 2021.