Venture Zombie Strategy Quadruples Bending Spoons Valuation to $11 Billion

Italian tech firm Bending Spoons just made global headlines. The company announced a $270 million funding round and the acquisition of AOL. This deal quadrupled its valuation to a staggering $11 billion. The news confirms a powerful new investment trend.

Bending Spoons has perfected a unique acquisition playbook. It buys stagnating tech brands like Evernote and Vimeo. It then revives them through aggressive cost-cutting and price hikes, turning them into cash-generating assets.

The “Buy, Fix, and Hold” Playbook for Stalled Startups

This strategy targets what some investors call “venture zombies.” These are VC-backed startups that have stalled and can no longer secure new funding. According to TechCrunch, Andrew Dumont of Curious champions this model. His firm also acquires these businesses to reset them for profitability.

The goal is not a quick flip. Unlike private equity, firms like Bending Spoons and Curious plan to hold these companies forever. They purchase them at a fraction of a healthy startup’s valuation. Some “venture zombies” sell for as low as one times their annual revenue.

Why This Model is Reshaping the Software Landscape

This approach creates a powerful, self-sustaining engine. The profits from the revived companies are used to fund new acquisitions. Centralizing functions like sales and marketing across the portfolio slashes costs. This allows for profit margins of 20% to 30% almost immediately.

The model thrives where traditional venture capital fails. VCs prioritize high-growth for a massive exit. This new wave of investors cares about sustainable earnings. They provide liquidity for stuck startups and their investors, creating value by focusing on profitability over hyper-growth.

The “venture zombie” strategy is proving to be a formidable force in the tech world. By focusing on cash flow over unicorn status, firms like Bending Spoons are building immense value. This sustainable model is set to redefine the future of software business ownership.

Info at your fingertips

What is a “venture zombie”?

A “venture zombie” is a startup that has stalled. It cannot grow enough for a major VC exit but still generates recurring revenue. These companies often become acquisition targets for specialized firms.

How do firms profit from these acquisitions?

They buy companies at low prices and cut costs dramatically. Centralizing operations across multiple businesses boosts efficiency. This quickly turns them into profitable, cash-flow positive entities.

Which companies use this strategy?

Bending Spoons is a prominent example, along with firms like Curious and Tiny. These companies have acquired brands like Evernote, Meetup, Vimeo, and UserVoice to revitalize them.

Why don’t VCs operate this way?

Venture capitalists need massive growth for billion-dollar exits. They do not prioritize the steady earnings that make the “venture zombie” model so profitable and sustainable in the long term.

Is this a new investment trend?

The strategy was pioneered by Constellation Software decades ago. It is now gaining significant momentum as more firms recognize the value in profitable, if slower-growing, software businesses.