Online technology retailer Overstock announced that it is converting its blockchain investment wing into a cryptocurrency-focused investment fund. As it seeks to maximize profits amid the crypto boom.
As part of the change, Overstock’s wholly owned blockchain-focused subsidiary, Medici Ventures, will become a limited partnership fund, pending legal and regulatory approval.
Medici Ventures, which previously oversaw and managed Overstock’s investments in blockchain-related companies. Will cease providing its usual services, which also included software development and design services.
The fund is expected to run through 2029, with a capital commitment of $45 million. Third-party venture capital firm Pelion Ventures Partners will act as general partner of the fund. Exercising sole authority and responsibility over investment decisions.
“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,” Overstock chief executive officer Jonathan Johnson said.
“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 Have determined it is time to partner with a seasoned venture capital firm to oversee the portfolio. To 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.”
Maximize Value Of Blockchain Assets
Pelion Ventures founder and general partner Blake Modersitzki added, “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.”
Profits from the fund will be returned to Overstock first before being split according to the fund’s limited partnership agreement. The fund will also own a “significant” minority stake in the Overstock-owned tZero Group.
“We have been looking for the right solution to help us maximize the value of these assets. Are delighted to have found a skilled and knowledgeable partner in Pelion,” Johnson said.
“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 ecommerce business, which realized tremendous revenue, profit, and market share growth in 2020.”
Overstock has scheduled a conference call and webcast for 8:30am ET on Tuesday, January 26, 2021, to discuss this announcement and take questions from participants. As of press time, the company’s stock is up 8.06% post-market.
While the collaboration has shed a positive light on Overstock, the company is still facing legal issues. Earlier in January, a Utah federal judge reversed his decision to dismiss a class-action lawsuit that accuses Overstock of knowingly distributing a security token.
The OSTKO token was framed as a “digital dividend” airdropped for free to Overstock shareholders, which plaintiffs in the case claim was designed to manipulate the Overstock’s stock price.