Italian company Bending Spoons recently made headlines with its surprising moves in the tech industry. Within just 48 hours, the company revealed its acquisition of AOL and secured a massive $270 million funding round, skyrocketing its valuation to $11 billion, a significant increase from its previous valuation of $2.55 billion in early 2024.
Bending Spoons has distinguished itself by revitalizing struggling tech brands such as Evernote, Meetup, and Vimeo through aggressive cost-cutting measures and price adjustments. While the company’s strategy mirrors that of private equity firms, Bending Spoons has chosen to retain ownership of these businesses rather than sell them off.
Andrew Dumont, the founder and CEO of Curious, a firm specializing in acquiring and reviving “venture zombies,” predicts that the trend of holding onto acquired businesses indefinitely will become more prevalent in the future. This shift is expected to occur as AI-native startups render older VC-backed software companies less relevant in the market.
Dumont emphasizes the importance of identifying and revitalizing undervalued businesses that can generate significant cash flow after a strategic overhaul. This “buy, fix, and hold” approach is gaining traction among investors, with established players like Constellation Software and newer entrants such as Tiny, SaaS.group, Arising Ventures, and Calm Capital adopting similar strategies.
Curious, for instance, raised $16 million in dedicated capital in 2023 to acquire software companies facing stagnation and a lack of follow-on investment opportunities. Since then, the firm has successfully acquired five businesses, including UserVoice, a startup that had previously raised $9 million in VC funding.
By implementing cost-cutting measures and adjusting pricing strategies, Curious can swiftly improve the profitability of acquired businesses, achieving profit margins of 20% to 30% shortly after acquisition. This efficiency is attributed to the firm’s ability to centralize key functions like sales, marketing, and finance across its portfolio companies.
Unlike traditional startups focused on rapid growth at the expense of profitability, Curious prioritizes sustainable growth and profitability without the pressure for VC-scale exits. The cash flow generated from its revamped businesses is reinvested into acquiring additional startups, with plans to acquire 50 to 75 more startups generating $1 million to $5 million in recurring revenue annually over the next five years.
While Bending Spoons’ recent valuation surge may validate the effectiveness of the “venture zombie” acquisition model, Dumont anticipates limited competition due to the intensive effort required to turn around struggling businesses. Despite the challenges, Curious remains committed to its mission of reviving undervalued startups and driving long-term growth in the tech industry.