The Italian firm Bending Spoons remained largely unnoticed — that is, until recently. Over a two-day period, the company declared its purchase of AOL and a substantial $270 million funding round, which took its valuation to $11 billion, a fourfold increase from the $2.55 billion figure established in early 2024.
Bending Spoons has seen rapid growth by buying up struggling tech brands such as Evernote, Meetup, and Vimeo, and subsequently making them profitable via steep cost reductions and higher prices. Though the company’s strategy is similar to that of private equity, one significant aspect sets them apart: Bending Spoons intends to keep these businesses indefinitely.
Andrew Dumont, founder and CEO of Curious, a company that also buys and breathes new life into what he refers to as “venture zombies,” believes that this “hold forever” approach will gain prominence in the coming years as AI-driven startups diminish the relevance of older VC-backed software firms.
“We believe that the venture power law, where 80% of companies ‘fail,’ still yields many viable businesses, even if they don’t reach unicorn status,” Dumont told TechCrunch.
Dumont describes a “great business” as one that can be acquired cheaply and quickly revitalized to produce significant cash flow. This “buy, fix, and hold” strategy serves as a blueprint for a growing number of investors, from Constellation Software, which pioneered the model 30 years ago, to more recent entrants like Bending Spoons, Tiny, SaaS.group, Arising Ventures, and Calm Capital, according to Dumont.
“Our entire model revolves around buying these companies, ensuring they become profitable, and then utilizing those profits to further expand the business,” Dumont explained.
In 2023, Curious secured $16 million in dedicated funding to acquire software companies that have stalled and are no longer able to attract additional investment.
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Since then, the firm has acquired five businesses, including UserVoice, a 17-year-old startup that received $9 million in VC funding from Betaworks and SV Angel.
“It’s a solid business, but the cap table wasn’t conducive to its continuation. These funds age, and these companies simply languish,” Dumont noted. “We offer liquidity while also repositioning these companies for profitability.”
While Dumont did not reveal the purchase price for UserVoice, he mentioned that struggling companies are sold for much less than healthy SaaS startups, which typically fetch 4x annual revenue or more. Based on our discussion, we estimate that “venture zombies” sometimes sell for as little as 1x annual revenue.
By applying cost-cutting measures and raising prices, Curious can boost these businesses to achieve profit margins of 20% to 30% almost immediately. “If you have a million-dollar business, it can generate $300,000 in earnings,” he cited as an example.
They succeed in these turnarounds because, unlike independent companies, they can consolidate functions such as sales, marketing, finance, and other administrative roles across all their portfolio companies. “We are not looking to sell the businesses we buy, and we don’t require VC-scale exits, which allows us to more sustainably balance growth with profitability,” Dumont stated.
When asked why VCs don’t push their startups to be profitable like Curious, Dumont responded: “Investors aren’t concerned with profits; they only focus on growth. Without it, there’s no VC-scale exit, so there’s no motivation to operate with such a focus on profitability.”
The funds generated by Curious’ companies are then reinvested in buying other startups, according to Dumont.
The firm intends to acquire 50 to 75 startups similar to UserVoice over the next five years, and Dumont is confident that they will have ample options. Curious is targeting startups with $1 million to $5 million in annual recurring revenue, a segment of the software market that Dumont says private equity firms and secondary investors have largely overlooked.
“We’ve been at this for just under two years, and we’ve probably assessed at least 500 companies, of which we’ve purchased five,” Dumont shared.
Although Bending Spoons’ significant valuation increase might validate the “venture zombie” acquisition model, Dumont doesn’t anticipate much new competition. Turning struggling companies profitable is a difficult task. “It requires a tremendous amount of effort,” he concluded.
