Italian company Bending Spoons has recently made headlines with its impressive growth and strategic acquisitions. In just 48 hours, the company announced the acquisition of AOL and secured a massive $270 million raise, catapulting its valuation to $11 billion, a significant increase from $2.55 billion earlier in 2024.
Bending Spoons’ success can be attributed to its unique approach of acquiring struggling tech brands like Evernote, Meetup, and Vimeo, and then revitalizing them through cost-cutting measures and price adjustments. Unlike traditional private equity firms, Bending Spoons has no intention of selling off these businesses, opting instead to hold onto them for the long term.
Andrew Dumont, the founder and CEO of Curious, a firm specializing in acquiring and reviving “venture zombies,” believes that this strategy of acquiring and holding onto businesses will become increasingly popular as AI-native startups render older VC-backed software companies obsolete. Dumont emphasizes the importance of identifying undervalued businesses that can be quickly turned around to generate substantial profits.
Curious raised $16 million in dedicated capital in 2023 to acquire software companies that have hit a plateau and are unable to attract further investment. Since then, the firm has successfully acquired five businesses, including UserVoice, a 17-year-old startup that had previously received funding from prominent VC firms.
By implementing strategic cost-cutting measures and increasing prices, Curious aims to achieve profit margins of 20% to 30% in its portfolio companies. Unlike traditional startups, Curious can streamline functions like sales, marketing, and finance across its acquisitions, leading to improved efficiency and profitability.
Dumont highlights the discrepancy between the focus on growth by traditional VCs and the emphasis on profitability by firms like Curious. While VCs prioritize rapid growth and large exits, companies like Curious prioritize sustainable profitability and long-term success.
Looking ahead, Curious plans to acquire 50 to 75 startups over the next five years, focusing on businesses generating $1 million to $5 million in annual recurring revenue. Despite the success of Bending Spoons and Curious, Dumont believes that the “venture zombie” acquisition model is not easily replicable and requires significant effort and expertise.
In conclusion, while Bending Spoons’ recent valuation increase underscores the potential of the “venture zombie” acquisition strategy, it is clear that transforming stagnating businesses into profitable ventures is a challenging endeavor that requires dedication and skill.
