Overstock.com, Inc. (NASDAQ:OSTK) will be converting Medici Ventures, Inc., its wholly-owned blockchain-focused subsidiary, to a limited partnership. An entity within Pelion Venture Partners, a third-party venture capital firm with a proven track record of successfully investing in early stage companies, will act as the general partner of the fund.
“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,” said Overstock chief executive officer Jonathan Johnson. “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.”
“We are honored Overstock selected us to maximize the value of its blockchain assets,” said Pelion Ventures founder and general partner Blake Modersitzki. “Many of these companies have real potential. We believe our team knows how to help them reach that potential.”
Under the arrangement, which will close after obtaining necessary legal and regulatory approvals, Medici Ventures will be converted into a limited partnership. Overstock will be a limited partner in the fund. 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 will have an eight-year life and a total capital commitment of $45 million. It 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.
“We have been looking for the right solution to help us maximize the value of these assets, and we are delighted to have found a skilled and knowledgeable partner in Pelion,” continued Mr. Johnson. “We believe this structure offers the best opportunity for Medici Ventures’ companies to have meaningful exits and allows Overstock executives to focus on its core e-commerce business, which realized tremendous revenue, profit, and market share growth in 2020.”
Medici Ventures will discontinue providing software development and design services to its portfolio companies. As an ongoing advocate of blockchain technology, Overstock will continue to accept bitcoin as a form of payment for products purchased on its website.
