Bending Spoons, an Italian company, has rapidly ascended in the tech investment world, achieving a $11 billion valuation in a remarkably short period. Just 48 hours after announcing the acquisition of AOL and securing a $270 million funding round, the company’s valuation quadrupled from its earlier 2024 level of $2.55 billion. The company’s strategy centers on acquiring established, yet struggling tech brands – including Evernote, Meetup, and Vimeo – and revitalizing them through aggressive cost-cutting measures and strategic price increases. This approach echoes the tactics of private equity firms, however, Bending Spoons’ key distinction lies in its commitment to holding onto these businesses long-term, a strategy that founder and CEO Andrew Dumont believes will gain increasing prominence, particularly with the rise of AI-native startups.
Dumont, the head of Curious, a firm also dedicated to acquiring and revitalizing what he terms “venture zombies,” is confident in this “hold forever” approach. He argues that the venture capital power law – the observation that 80% of companies ultimately fail – generates substantial opportunities, even for businesses that don’t reach unicorn status. Dumont defines a “great business” as one that can be purchased at a low price and quickly revived to generate significant cash flows. This “buy, fix, and hold” strategy is being adopted by a growing circle of investors, including the 30-year-old Constellation Software, which pioneered the model, and newer players such as Bending Spoons, Tiny, SaaS.group, Arising Ventures, and Calm Capital.
The Curious firm itself has been aggressively pursuing this strategy, raising $16 million in dedicated capital specifically for acquiring software companies that have stalled and are no longer attracting follow-on investment. Since launching this initiative in 2023, the firm has successfully purchased five businesses, most notably UserVoice, a 17-year-old startup that received $9 million in VC funding from Betaworks and SV Angel. According to Dumont, UserVoice represented a “great business” that was hampered by an unaligned cap table, a common issue where funds allocated to startups begin to age and the company stagnates. “We provide liquidity and also reset these companies for profitability,” Dumont stated. While the exact purchase price for UserVoice remains undisclosed, Dumont indicated that stagnant companies typically sell for a fraction of the valuation commanded by thriving SaaS startups, which often command a multiple of 4x annual revenue or higher. Estimates place the sale price of “venture zombies” as low as 1x yearly revenue.
To fuel its turnaround efforts, Curious implements cost-cutting and price increases, enabling its portfolio companies to achieve profit margins of 20% to 30% within a relatively short timeframe. Dumont illustrated this potential with an example: “If you have a million-dollar business, you’re kicking off $300,000 in earnings.” A key element of Curious’ success is its ability to centralize key functions – sales, marketing, finance, and administration – across all its acquired companies, a structure that eliminates redundancies and streamlines operations. “We’re not trying to sell the businesses we acquire and don’t need VC-scale exits, so we can balance growth and profitability more sustainably,” Dumont explained.
When questioned about why venture capitalists often prioritize growth over immediate profitability, Dumont responded, “Investors don’t care about earnings; they only care about growth. Without it, there’s no VC-scale exit, so there’s no incentive to operate with that level of profitability.” The cash generated by Curious’ portfolio companies is then reinvested to acquire additional startups. The firm anticipates buying 50 to 75 companies like UserVoice over the next five years, and Andrew Dumont is confident that a sufficient number of targets will be available. Curious is currently focusing on acquiring startups generating between $1 million and $5 million in annual recurring revenue – a segment of the software market that private equity and secondary investors have historically overlooked. Over the past two years, the firm has examined at least 500 companies, ultimately purchasing five. Despite Bending Spoons’ impressive valuation increase, Dumont anticipates limited competition in this “venture zombie” acquisition model, highlighting the substantial work required to transform stagnant businesses into profitable ventures.