Italy’s Bending Spoons and the ‘Venture Zombie’ Strategy: Giving new life to old startups

Staff Report: PNN

Italy’s tech company Bending Spoons has recently made headlines. Within just two days, it announced the acquisition of AOL and raised $270 million, increasing its valuation to $11 billion — four times higher than the $2.55 billion valuation at the beginning of 2021.

The secret to Bending Spoons’ rapid growth is acquiring old, stagnant tech brands like Evernote, Meetup, and Vimeo, and then making them profitable through strict cost control and value enhancement. Unlike private equity, they do not plan to sell these businesses.

Curious, another company, follows a similar strategy. Its founder and CEO Andrew Dumont said the “buy, fix, hold” strategy will become increasingly popular. They target startups losing relevance due to AI-based new businesses and make them profitable again.

Dumont explained, “According to venture norms, 80% of companies fail, yet many excellent businesses emerge, even if they are not unicorns. A ‘great business’ can be acquired at low cost and quickly made profitable.”

In 2023, Curious raised $16 million to buy and revive only stagnant software companies, already acquiring five, including UserVoice. Dumont said their cost-cutting and value-increasing measures allow a 20–30% profit margin quickly.

The core strategy is not selling but increasing profits, ensuring sustainable growth and profit. Unlike venture capital, which prioritizes growth for eventual sale, Bending Spoons ensures profitability. Over the next five years, Curious plans to acquire 50–57 startups with annual recurring revenue of $1–5 million.

Bending Spoons’ recent valuation increase proves the effectiveness of the “venture zombie” strategy, although Dumont believes new competitors will not easily replicate it due to the intensive labor and planning required.