A Quiet Shift Is Reshaping Tech M&A And Turning Stagnant Startups Into Profitable Cash Machines
For over a decade, venture-backed startups thrived on continuous fundraising, high valuations, and an unwavering focus on growth. However, as AI-driven companies change the software landscape and capital becomes more selective, a new type of buyer is emerging. This buyer does not subscribe to the traditional venture model of “grow, raise, exit.”
Instead, they seek something that Silicon Valley often overlooks: profitable but neglected software companies derisively called “venture zombies.”
And they’re not buying these companies to flip. They’re buying them to hold forever.
Bending Spoons: The $11 Billion Wake-Up Call
The model gained global attention when Italian tech company Bending Spoons made two significant moves in 48 hours:
- acquiring AOL and
- raising $270 million, pushing its valuation from $2.55 billion to $11 billion.
Bending Spoons’ strategy is straightforward but bold: acquire stagnating but well-known tech brands like Evernote, Meetup, and Vimeo, then improve them through aggressive cost-cutting, price hikes, and operational changes.
This approach resembles private equity discipline but differs in a key way:
Bending Spoons never plans to sell.
“Hold forever” is more than a slogan; it’s a business philosophy. It now inspires a new generation of operators who see potential where venture capital sees failure.
The Rise of the “Venture Zombie” Market
Andrew Dumont, founder and CEO of Curious, is one of the strongest advocates for this new acquisition model. His firm focuses on buying and revitalizing aging or stagnant SaaS startups.
His perspective on the venture economy is clear:
“The venture power law says 80% of companies ‘fail.’ But many of these so-called failures are actually great businesses—just not unicorns.”
Dumont labels these companies “venture zombies”—not dead, but not thriving enough for Silicon Valley to care. They usually:
- generate significant recurring revenue
- have loyal customer bases
- but lack the rapid growth VCs demand
These companies often become unwanted: too small to excite investors, too complicated for founders to manage, and too stagnant to raise money.
But for firms like Curious, they’re valuable.
A Simple Formula: Buy Cheap, Fix Fast, Hold Forever
Dumont’s thesis is built on two key ideas:
- 1. Venture-backed companies with stalled growth sell for very low prices.
- 2. Centralizing operations allows buyers to raise profit margins quickly.
According to Dumont, a healthy SaaS company might sell for four times its annual revenue, but a zombie can sell for as little as one time revenue.
That alone creates a huge advantage.
A Real Example: UserVoice
Curious recently bought UserVoice, a 17-year-old startup that once received funding from SV Angel and Betaworks. Dumont won’t reveal the sale price, but based on market trends, it likely sold for a fraction of its previous valuation.
The reason? “Cap table misalignment,” Dumont explains.
VC funds have fixed timelines. As a fund ages, portfolios become stagnant. Founders find themselves trapped in companies that investors no longer actively support.
Curious addresses that issue.
“We provide liquidity and reset these companies for profitability.”
The Playbook: Efficiency Over Hypergrowth
Unlike traditional startups that spread resources across different departments, Curious centralizes everything—sales, marketing, finance, customer support, and administration.
This setup helps each acquired business become more efficient immediately.
Dumont elaborates:
“If you have a million-dollar business, you can often generate $300,000 in earnings almost right away.”
Many companies that Curious acquires quickly reach profit margins of 20–30% by:
- eliminating duplicate roles
- raising prices
- cutting unprofitable features
- focusing on core customers
This streamlined operating model dramatically contrasts with venture-backed SaaS, where investor funding often covers growth while profitability is usually a distant goal.
Why Venture Capital Can’t Fix Its Own Zombies
A common question for Dumont is straightforward: If these companies can be profitable, why don’t VCs encourage founders to run them that way?
His response is clear:
“Investors don’t care about earnings; they care about growth. Without growth, there’s no VC-scale exit.”
A business generating cash flow but not growing quickly becomes a liability in a VC portfolio. It drags down fund performance and diverts attention from potential unicorns.
So, even solid businesses get left behind.
This misalignment of interests creates the perfect opportunity for “hold forever” buyers.
Scaling an Empire of Zombies
Curious raised $16 million in 2023 as dedicated funding for purchasing slow-growth software companies. Since then, it has acquired five companies and looked at over 500.
Over the next five years, Dumont aims to acquire 50 to 75 additional SaaS businesses that generate $1 million to $5 million in annual recurring revenue—an area he says both private equity and secondary investors have typically ignored.
Why this specific range?
Because companies in this category are:
- too small for private equity
- too stagnant for venture capital
- but large enough to produce substantial monthly cash flow.
In other words, they are ideal for a long-term growth model.
Constellation Software: The Undisputed Blueprint
This strategy isn’t entirely new.
The most successful “hold forever” company is Constellation Software, a Canadian firm that has quietly acquired over 1,000 vertical software businesses in 30 years—never selling a single one.
Its method is the same:
- buy cheap
- centralize operations
- improve margins
- compound cash over decades.
Today, Constellation’s market cap exceeds $60 billion.
Several modern players—Bending Spoons, Tiny, SaaS.group, Arising Ventures, and Calm Capital—are following this same model.
Curious is one of the newest entrants, but Dumont believes the opportunity is growing, not shrinking.
AI Is Accelerating the Trend
One major factor driving this “zombie” revival is the rise of AI-native startups.
Dumont argues that AI is creating two parallel paths in software:
- New AI-first startups are replacing older tools.
- Older SaaS companies lacking AI features are losing momentum and funding.
This situation presents more opportunities for buyers.
As investors pursue AI unicorns, they pull capital away from older SaaS models, pushing them further into stagnation. Those companies then become prime targets for buyers who focus on fixing and holding.
Dumont anticipates this trend will pick up speed:
“AI renders older software less relevant. That’s precisely why the ‘hold forever’ model works—we can acquire these companies at low prices, modernize them, and run them profitably.”
Why More Investors Aren’t Doing This
One might think that after Bending Spoons’ valuation surge and Constellation Software’s decades of growth, other investors would rush to imitate the model.
However, Dumont does not foresee a wave of competitors.
Why?
“Because it’s incredibly hard,” he says.
Reviving a struggling software company calls for:
- strong operational focus
- deep product understanding
- emotional strength
- readiness to make tough cuts
- patience over years, not months.
“You have to become an operator, not just an investor,” Dumont explains.
Most investors shy away from that kind of commitment.
A Quiet but Structural Shift in the Tech Economy
While this market remains under the radar, it signals a significant change in how value is created in the post-AI world.
Three forces are driving this shift:
1. Venture capital is becoming more selective.
Money is now directed to fewer categories with larger potential returns, leaving hundreds of SaaS companies stranded.
2. AI-native products are diminishing the value of older software.
Startups launched in the last 18 months often operate leaner, faster, and with better automation.
3. The cost of running software businesses is going down.
Cloud efficiencies, automation, and shared services enable buyers to manage multiple companies effectively.
Together, these trends make “hold forever” investing both possible and increasingly appealing.
The Future: A New Class of Tech Conglomerates
Bending Spoons’ rapid valuation growth, combined with Constellation Software’s long-term achievements, suggests a clear direction for the market.
Over the next decade, experts anticipate:
- more roll-up firms
- larger collections of small SaaS companies
- increasing interest in underperforming assets
- growing competition for $1–5 million ARR startups.
But despite the potential, Dumont insists the work is becoming tougher, not easier.
“Turning profits from stagnation isn’t simple. It requires a lot of effort.”
Still, the financial incentives are hard to ignore.
While Silicon Valley continues to chase the next billion-dollar AI startup, another movement—quieter, less flashy, but highly profitable—is forming in the background.
The era of the “hold forever” buyer has begun. For many neglected software companies, it just might be the lifeline they never saw coming.
