Italian company Bending Spoons has largely flown under the radar — until last month. In the space of 48 hours, the company announced its acquisition of AOL and a massive $270 million raise, quadrupling its valuation to $11 billion from the $2.55 billion it had set in early 2024.
Bending Spoons grew rapidly by acquiring stagnant tech brands like Evernote, Meetup, and Vimeo, then making them profitable through aggressive cost-cutting and price increases. While the company’s approach is similar to private equity, there is one key difference: Bending Spoons has no plans to sell these businesses.
Andrew Dumont, The founder and CEO of Curious, a company that also acquires and revives what he calls “zombie businesses,” is convinced that this “hold on forever” strategy will become increasingly prominent in the coming years as AI startups make older VC-backed software businesses less relevant.
“Our belief is that the law of entrepreneurial power, in which 80% of companies ‘fail,’ produces many great businesses, even if they are not unicorns,” Dumont told TechCrunch.
Dumont defines a “big business” as one that can be bought at a low price and revived quickly to generate significant cash flow. This buy, fix and hold strategy is the playbook for a growing number of investors, from 30-year-old Constellation Software, which pioneered the model, to newer players including Bending Spoons, Microscopic, SaaS.group, Arising Venturesand Calm capitalaccording to Dumont.
“Our whole model is to buy these companies, make them profitable and use those profits to grow the business,” Dumont said.
In 2023, Curious raised $16 million in special capital to buy software companies that have stalled and can no longer secure follow-on investment.
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Since then, the company has bought five businesses, including UserVoice, a 17-year-old startup that raised $9 million in VC funding from Betaworks and SV Angel.
“It’s a great business, but the cap table wasn’t aligned with keeping it. These funds are getting old and these companies are just sitting there,” Dumont said. “We provide liquidity and also bring these companies back to profitability.”
While Dumont didn’t disclose how much he paid for UserVoice, he said established companies are selling for a fraction of the valuations commanded by healthy SaaS startups, which typically sell for 4x annual revenue or more. Based on our discussion, we estimate that “zombie ventures” sometimes sell for up to 1x annual revenue.
By implementing cost cuts and price increases, Curious can push these businesses to achieve 20% to 30% profit margins almost immediately. “If you have a million-dollar business, you make $300,000 in profit,” he offered as an example.
They achieve turnarounds because, unlike stand-alone companies, they can centralize functions such as sales, marketing, finance and other management roles across their portfolio companies. “We’re not trying to sell the businesses we’re acquiring, and we don’t need VC-scale exits so we can balance growth and profitability more sustainably,” Dumont said.
When asked why VCs don’t push their startups to be profitable the way Curious does, Dumont responded by saying, “Investors don’t care about profits, they only care about growth. Without it, there is no exit at VC scale, so there is no incentive to operate at this level of profitability.”
The cash generated by Curious’s companies is then used to buy other startups, Dumont said.
The company plans to buy 50 to 75 startups like UserVoice over the next five years, and Dumont is confident it will have no shortage of targets to choose from. Curious is focused on acquiring startups that generate $1 million to $5 million in recurring revenue annually, a segment of the software market that, according to Dumont, private equity shops and secondary investors have historically ignored.
“We’ve been doing this for a little under two years now, and we’ve probably looked at at least 500 companies and bought five,” Dumont said.
While Bending Spoons’ big increase in valuation may validate the “venture zombie” takeover model, Dumont doesn’t expect much new competition. Pulling profits out of stagnation is not easy. “It’s a ton of work,” he said.
