A Silent Technology Player Becomes an Overnight Monopolist. The Bending Spoons Italian tech firm was featured in the news following a 48-hour bomb:
- Acquiring AOL
- Raising $270 million
- Valuation of 11billion, compared with 2.55billion in 2024.
The company also began with a momentum of buying underperforming software brands such as Evernote, Meetup and Vimeo and quickly propelling them into profitability by trimming their operations and price changes. Bending Spoons is not like the other private equity groups, which buy and sell the companies, but adhere to the philosophy of holding them forever.
The Advent of the Venture Zombie Market.
The notion of acquiring stagnating, VC-funded startups which have never turned into unicorns is becoming increasingly popular. Andrew Dumont, chief executive of Curious, is a specialist in salvaging such doomed software firms, otherwise known as venture zombies. Dumont trusts that this will turn into the mass as AI-native startups will surpass the older SaaS models. The law of venture power indicates that 80 percent of start ups fail. Most of them remain great businesses, explained Dumont on TechCrunch.
A great business, he says, is a business that is purchased at low prices, a business that is fixed easily and a business that can bring good cash flows. This practice reflects the ancient playbook of Constellation Software, and is now being reflected in the emergent competitors such as Tiny, SaaS.group, Arising Ventures and Calm Capital.
The Buy-Fix-Hold Strategy and Its Operation.
In 2023, Curious raised 16 million dollars to acquire stalled software companies that are no longer able to raise venture capital. To date, the company has acquired five companies with one of them being UserVoice, a 17-year-old start-up that received a $9 million capital injection by Betaworks and SV Angel. Most of such businesses fetch as low as 1x annual revenue, a colossal price to pay as opposed to well-prepared SaaS business, which can fetch 4x and above. Curious resuscitates such companies by:
- Focusing operations such as sales, marketing, finance and administration.
- Reduction of unnecessary costs.
- Increasing pricing
- Focusing on sustainable cash flow as opposed to hypergrowth.
This will enable Curious to break into 20-30% profit margins within a short period. As an illustration: An example of such a business where its annual earnings can be maximized by restructuring can be a $1 million business to generate a maximum of $300,000
The reason why Venture Capital does not drive towards profitability.
Dumont believes that the misalignment is caused by VC incentives. Investors are not interested in earnings, but rather in growth. There is no VC-scale exit without a massive growth. This puts a large number of old startups in a difficult position: they are too slow to attract new VC capital but still profitable businesses with customers and revenue. Curious offers funding to founders and investors, and offers these businesses a second life.
A Large Pipeline of Targets–And Little Competition
Curious has intentions to buy 50-75 startups during the five years, prioritizing startups with 1M-5M in annual recurring revenue- an industry that is not commonly targeted by private equity firms.
According to Dumont, the opportunities are abundant: “We have reviewed 500 different companies in less than two years and purchased only five. However, even with the valuation increase of Bending Spoons that marked the headlines, Dumont is not anticipating an influx of new competitors. To convert stagnation into profit, there has to be a profound operational experience and an uncompromising implementation. “It’s a ton of work,” he said.
A Fresh Start of Forgotten Startups
With the software market transforming as a result of AI, additional VC-funded organizations will lag behind. However, they do not have to die but most of them might have a new life in the hands of investors who will be willing to purchase them, repair them and retain them over the long-term.
Its model of venture zombie revival is ceasing to be a fringe theory – it is becoming one of the most fascinating new directions in tech acquisitions.
