According to TechCrunch, Italian company Bending Spoons just quadrupled its valuation to $11 billion from $2.55 billion in early 2024 after acquiring AOL and raising $270 million. The company has grown by buying stagnating tech brands like Evernote, Meetup, and Vimeo, then turning them profitable through aggressive cost-cutting and price increases. Andrew Dumont, founder of Curious, calls these companies “venture zombies” and says his firm has raised $16 million in 2023 specifically to buy software companies that have stalled. Curious has purchased five businesses including 17-year-old UserVoice, which raised $9 million from Betaworks and SV Angel but couldn’t secure follow-on funding. Dumont estimates these stagnant companies sometimes sell for as low as 1x yearly revenue compared to healthy SaaS startups that command 4x revenue or more.
The zombie economy
Here’s the thing about venture capital that nobody talks about: the “failures” aren’t always actual failures. They’re just companies that can’t deliver the 100x returns VCs need. But what if you don’t need 100x returns? What if 20-30% profit margins are enough?
That’s exactly what firms like Curious, Tiny, SaaS.group, and Bending Spoons are banking on. They’re buying companies that VCs have essentially abandoned but still have revenue and customers. The playbook is simple: centralize functions like sales and marketing across portfolio companies, cut costs aggressively, raise prices, and suddenly you’ve got cash-generating machines.
Why VCs don’t care about profits
When TechCrunch asked Dumont why VCs don’t push their portfolio companies toward profitability, his answer was brutally honest: “Investors don’t care about earnings, they only care about growth.” And he’s right. The VC model depends on outlier outcomes – those rare companies that become worth billions. Everything else is basically worthless to them, even if it’s making money.
So these “zombie” companies just sit there. Their cap tables become misaligned as funds age out. The original investors have moved on, but the companies keep ticking along with modest revenue. They’re the walking dead of the startup world – not growing enough to attract more venture money, but not dead enough to shut down.
The forever strategy
The most interesting part of this model is the “hold forever” approach. Unlike private equity that typically flips companies in 3-7 years, these firms plan to keep their acquisitions indefinitely. The cash flow from one company funds the purchase of the next, creating a self-sustaining ecosystem.
Dumont says Curious can push these businesses to 20-30% profit margins almost immediately. “If you have a million-dollar business, you’re kicking off $300,000 in earnings,” he explained. That money then gets recycled into buying more companies. They’re building what amounts to a software conglomerate of “good enough” businesses that VCs ignored.
Why this is happening now
Look, the timing makes perfect sense. We’re coming off a decade of easy money where VCs funded everything that moved. Now that capital has tightened up, there are hundreds of companies that raised money but can’t raise more. They’re stuck in this awkward middle ground – too small for IPOs or big acquisitions, but too established to die.
Firms like Arising Ventures and Calm Capital are stepping into this gap. They’re focused on the $1-5 million annual recurring revenue segment that traditional private equity has mostly ignored. Dumont says they’ve looked at 500 companies and bought five – so the pipeline is massive.
The crazy part? Despite Bending Spoons’ massive valuation jump validating the model, Dumont doesn’t expect much new competition. Why? Because turning profits from stagnation is “a ton of work.” It’s not sexy. It’s not about building the next AI unicorn. It’s about doing the unglamorous work of making existing businesses actually profitable. And in today’s market, that might be the smartest play of all.
