Why ‘hold forever’ investors are snapping up venture capital ‘zombies’

A structural shift in how institutional capital approaches distressed software companies is gaining momentum, with a growing cohort of investors adopting a "hold forever" acquisition strategy fundamentally distinct from traditional private equity playbooks. Italian software company Bending Spoons exemplifies this model, having acquired established but stagnating brands including AOL, Evernote, Meetup, and Vimeo, then aggressively optimized them for profitability through cost reduction and pricing discipline rather than growth-at-all-costs expansion.

Bending Spoons' recent capital raises underscore institutional conviction in the model: the company's valuation climbed to $11 billion following a $270 million funding round announced in November 2024, representing a fourfold increase from its $2.55 billion valuation in early 2024. The dual announcements of the AOL acquisition and capital raise within 48 hours signaled that major institutional investors—including family offices and growth-stage funds—now view permanent ownership of profitable software businesses as a legitimate alternative to traditional venture or buyout exits.

Andrew Dumont, CEO of Curious (another prominent practitioner), articulates the strategic rationale: venture capital's inherent power law, in which approximately 80% of portfolio companies fail to achieve unicorn status, produces a residual population of fundamentally sound businesses that retain customer bases, recurring revenue, and operational viability despite falling out of favor with growth investors. Curious raised $16 million in dedicated capital in 2023 specifically to acquire software companies unable to attract follow-on venture funding—effectively monetizing the gap between perceived value destruction and underlying cash generation capacity.

The investor base executing this playbook now spans multiple generations: Constellation Software, a 30-year-old acquirer, pioneered the model and established proof of concept across decades. Newer entrants including Tiny, SaaS.group, Arising Ventures, and Calm Capital have replicated the framework with fresh capital. According to Dumont, the strategy's acceleration will likely intensify as AI-native software competitors displace or devalue older, VC-backed platforms, expanding the addressable universe of acquisition targets available at depressed entry multiples. The model's durability rests on the conviction that profitable, cash-generative software businesses—even if they lack growth narratives or venture pedigree—retain intrinsic value when optimized for returns rather than scale.