The dynamic between Overstock and its subsidiary Medici Ventures is set to change. Overstock has just announced that it will be transforming Medici Ventures from its investment arm in to a fund. Furthermore, Overstock notes that while it will remain involved, it has partnered with Pelion Venture Partners to oversee management of the fund moving forward.
For years now, Overstock has been heavily involved in a variety of blockchain related ventures. In 2014 this interest manifested in the launch of Medici Ventures. Unfortunately, it would appear as though this venture has not been as profitable as hoped, requiring the aforementioned decision to bring in an outside fund manager. The goal behind this decision being to manifest profitable exits for its various companies.
The company did not mince words when explained why it has gone this route, with its CEO, Jonathan Johnson stating,
“We have been looking for the right solution to help us maximize the value of these assets…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 share growth in 2020.”
Simply put – executives at Overstock are focusing their efforts on what is making them money, which means offloading subsidiaries like Medici Ventures.
Details of the Fund
Moving forward, the fund will be structured as follows, with all authority transferred to Pelion.
Lifespan – 8 years
Capital Commitment – $45 million USD
Notably, the deal to convert and transfer control of Medici Ventures is structured so that all profits will be given to Overstock, until its invested capital is repaid. Only once this marker is reached will profits be split on successful exits.
Upon announcing the decision to convert Medici Ventures into a fund, representatives from each Overstock and Pelion took the time to comment.
Overstock CEO, Jonathan Johnson, stated,
“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 any companies to economic success.”
Pelion Ventures Founder, 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.”
Arguably the most notable investment to come from Medici Ventures, would be tZERO – a secondary marketplace catering to digital securities. The following are a few other examples of strategic investments made by Medici Ventures over the years.
While Overstock has not noted specifics on each of these companies, it directly states that it will ‘retrain a direct minority equity interest in tZERO’.