In a surprising turn of events, venture capital zombie startups—companies that are neither thriving nor dead but lingering with minimal growth—are becoming hot targets for a new breed of investors known as 'hold forever' investors in 2025.
These investors, often private equity firms or family offices with long-term horizons, are snapping up these underperforming startups at bargain prices, betting on their potential for slow but steady returns over decades.
The Rise of Zombie Startups in Venture Capital
Historically, the venture capital ecosystem has been driven by high-risk, high-reward bets, with many startups either achieving massive success or failing spectacularly within a few years.
However, since the early 2020s, a growing number of startups have fallen into a limbo state, often due to overhyped valuations during funding booms followed by market corrections that left them unable to scale or exit.
Why Hold Forever Investors See Opportunity
Unlike traditional VCs seeking quick exits through IPOs or acquisitions, hold forever investors are drawn to the low acquisition costs of these zombie firms, viewing them as assets that can generate modest cash flow with minimal additional investment.
This trend is partly fueled by a broader venture capital slowdown since 2022, where limited exit opportunities have forced investors to rethink strategies, as reported by industry sources like TechCrunch.
Impact on the Startup Ecosystem
The influx of hold forever investors could reshape the startup landscape by reducing pressure on founders to achieve rapid growth, potentially fostering more sustainable business models over time.
Yet, critics argue this approach risks stifling innovation, as capital tied up in underperforming zombies might otherwise fund promising new ventures.
Looking Back: A History of VC Challenges
Looking back, the dot-com bust of the early 2000s and the post-2021 funding winter both created waves of zombie companies, but the current scale—combined with a lack of IPO activity—has amplified the phenomenon in 2025.
In the future, experts predict that this trend may lead to a two-tier VC market, where high-growth startups coexist with a parallel ecosystem of slow-burn, zombie-like entities held indefinitely.
What Lies Ahead for Venture Capital?
As 2025 progresses, the growing presence of hold forever investors might signal a paradigm shift in how startup value is perceived, prioritizing patience over explosive growth.
Whether this will revitalize forgotten companies or create a drag on the broader innovation economy remains to be seen, but one thing is clear: the venture capital world is adapting to a new reality.
Andrew Lee
