Why ‘Hold Forever’ Investors Are Snapping Up Venture Capital ‘Zombies’
The insightful article on TechCrunch delves into the intriguing rise of “hold forever” investors who are reshaping the venture capital landscape by acquiring so-called venture capital “zombies” — startups that have stalled but still hold intrinsic value. The piece thoughtfully profiles both the Italian company Bending Spoons and U.S.-based Curious to illustrate how this new investment strategy capitalizes on steady, profitable growth rather than chasing explosive exits. For readers interested in sustainable venture investing and startup revitalization, this article offers valuable perspectives grounded in concrete examples and expert commentary. Read more here.
The Emergence of the ‘Hold Forever’ Model in Venture Capital
The article effectively captures how Bending Spoons has quietly transformed its business model by acquiring once high-flying but now stagnant tech brands like Evernote, Meetup, and Vimeo. What stands out is the company’s deliberate strategy of not selling these assets, diverging significantly from the typical private equity playbook. This distinction shines a light on an evolving investor mindset that values long-term profitability and stability over rapid exits. The thorough explanation by Andrew Dumont, founder and CEO of Curious, complements this narrative by framing these companies as quietly valuable “great businesses” rather than failures.
What Defines a ‘Venture Zombie’ and Why It Matters
Dumont’s concept of “venture zombies” — companies with solid fundamentals yet languishing due to misaligned incentives and capital constraints — is particularly compelling. The article effectively explains how such startups, typically overlooked by traditional private equity and secondary investors, present attractive acquisition targets for those who can instill operational efficiencies. Presenting precise financial insights, such as the potential to turn a million-dollar business into one generating 20-30% profit margins, adds much-needed clarity to what might otherwise be a nebulous concept.
Operational Efficiency and Profitability Over Growth Obsession
One of the article’s strengths lies in highlighting that unlike many venture capitalists who prioritize rapid growth with little emphasis on profit, “hold forever” investors focus on achieving stable profitability. By centralizing sales, marketing, finance, and administrative functions across portfolio companies, firms like Curious can quickly improve margins and cash flow. This practical explanation underscores why companies previously seen as “failures” can become sustainable businesses again, breaking the common VC narrative that growth at all costs is the only path forward.
The Broader Implication for the Venture Capital Ecosystem
The piece subtly questions the traditional venture capital model’s limitations in light of AI-native startups overshadowing older software businesses. It suggests that as the startup ecosystem evolves, more “hold forever” models might emerge, offering alternative paths for legacy companies to remain relevant and profitable. However, the article might have further enriched this point by exploring more deeply how these dynamics impact founders, employees, and customers caught amid these transitions.
Concrete Examples and Data Bolster the Narrative
The inclusion of notable case examples, like Curious’ purchase of UserVoice and Bending Spoons’ rapid valuation increase following acquisitions, grounds the article in real-world developments. Specifics about valuation multiples — such as “venture zombies” sometimes trading at just 1x annual revenue compared to the 4x+ typical for healthy SaaS startups — add an analytical layer that strengthens readers’ understanding of the economic rationale behind this strategy.
Potential Areas for Further Exploration
While the article excellently outlines the “hold forever” investment thesis and early success stories, it could benefit from an exploration of possible challenges these investors face. For example, considering the operational complexity of fixing multiple companies simultaneously or the long-term sustainability of this model amid shifting market conditions would provide a fuller picture. Additionally, deeper discussion on how these companies’ stakeholders — including original founders, employees, and customers — experience these transitions would round out the human element.
Conclusion: A Refreshing Take on Venture Investing
Overall, the article offers a fresh and well-informed look at a nuanced investment trend that contrasts sharply with prevailing VC orthodoxies. It successfully makes the case that profitability, operational discipline, and patience can revive tech companies that many might prematurely write off. For venture capitalists, entrepreneurs, and startup observers interested in diversified investment approaches and sustainable growth, this article is a compelling and timely read.