Overstock Turns Medici Ventures Into a Fund to Reap Value of Blockchain Assets

Under a plan to eventually exit its blockchain-related investments, Overstock is converting its Medici Ventures subsidiary into a fund managed by venture capital firm Pelion Venture Partners.

• Overstock explained Monday that blockchain-focused Medici Ventures will be converted into a limited partnership under the new management following legal and regulatory approval.
• The new fund will have a capital commitment of $45 million with an eight-year life.
• Pelion Venture Partners, which invests in early-stage startups, will be the general partner of the fund and Overstock will be a limited partner in the fund.
• According to the partnership agreement terms, the fund will return invested capital to Overstock first and then split profits on successful exits.
• “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,” said Overstock CEO Jonathan Johnson.
• Under the new terms, Medici Ventures will no longer provide software development and design services to its portfolio companies.
• Overstock will retain a direct minority equity interest in the blockchain technology firm tZERO Group, while the fund will hold a minority ownership stake.
• Following the announcement, Overstock shares (NASDAQ: OSTK) were trading 11.28% higher at $75 in Monday’s pre-market session.

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