An entity within the Salt Lake City venture capital firm Pelion Venture Partners will be a general partner for the fund.
'Since 2014, we have made investments in and advocated on behalf of companies advancing blockchain technology,” Overstock Chief Executive Jonathan Johnson said in a statement. “We remain bullish on blockchain technology but are changing the way we interact with these assets."
Medici will be converted into a limited partnership with Pelion having sole authority regarding investing decisions. The fund will have an eight-year life and total capital commitment of $45 million.
Analysts at Piper Sandler, who have an overweight rating on Overstock, Midvale, Utah, called the plan "highly favorable," as it will streamline Overstock into a pure-play retail e-commerce company, Bloomberg reported.
Wedbush analyst Ygal Arounian, who has an outperform rating on the stock, says the move "reinforces the new management team's dedication to the core retail business."
DA Davidson analyst Tom Forte called the move a "major catalyst" for Overstock's blockchain assets.
Needham analyst Rick Patel agreed with Wedbush's assessment that the move will enable Overstock to focus on its core segment.
Davidson and Needham have buy ratings on Overstock shares.
"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.”
Overstock at last check was up 21% at $81.62.