Venture Capital Zombies: Why Investors Are Buying Them
Summary of the TechCrunch Article: “What is Bending Spoons? Everything to Know About AOL’s Acquirer”
This TechCrunch article discusses the rise of Bending Spoons, a company acquiring and revitalizing struggling tech brands (like Evernote, Meetup, and Vimeo) - and a growing trend of investors doing the same. Here are the key takeaways:
* Bending Spoons’ Valuation & strategy: Bending Spoons is now valued at $11 billion, up from $2.55 billion in early 2024. They acquire underperforming tech companies, cut costs, raise prices, and aim to make them profitable – but unlike private equity firms, they don’t plan to resell them.
* “Hold Forever” Strategy: The article highlights a shift towards a “buy, fix, and hold” strategy, driven by the belief that many VC-backed companies, while not “unicorns,” are still fundamentally good businesses.
* AI’s Impact: The trend is fueled by the idea that AI-native startups are making older, VC-backed software businesses less relevant, creating opportunities for acquisition.
* Key Players: Bending Spoons isn’t alone. The article names othre firms employing this strategy, including:
* Constellation Software (a pioneer of the model)
* Tiny
* SaaS.group
* Arising Ventures
* Calm Capital
* Curious (featured prominently, with $16M in dedicated capital raised in 2023)
* Focus on Cash Flow: The core principle is to acquire companies cheaply, quickly restore profitability, and use those earnings for further growth.
* Example: UserVoice: Curious recently acquired UserVoice, a 17-year-old startup that previously raised $9 million in VC funding, highlighting the issue of misaligned cap tables in older funded companies.
In essence, the article portrays a new wave of investors focusing on rescuing and sustainably growing established, but struggling, tech businesses rather than chasing the next high-growth unicorn.