Bending Spoons is buying Airtable and it has small business owners confused about why this is BAD. Can't venture capital investment be good? Shouldn't we wait and see?
This is not a venture capital investment. It's an acquisition. These two terms may seem like a technicality but let me explain why they are completely different transactions—and more importantly, why the difference indicates how many alarm bells should ring for you when you read the news about your fave tech tool.
Let's start with private equity. I'm classifying Bending Spoons as private equity. They don't agree with that definition because they're cool, young Italian guys who wanted to be founders, failed and get to cosplay as founders now. But they basically operate like private equity minus the fact that they don't sell off the companies they acquire (they're also a fairly new company so we should expect this to change, in which case they are exactly like private equity). I am not the only one who considers them part of the PE crowd. Here's stories from Bloomberg, Seeking Alpha and TechCrunch likening them to private equity.
Private equity usually BUYS companies to own them and extract a return quickly. It's an exit for the founders and (if relevant) investors. The original team almost always leaves and is replaced by transitional leadership who are there to squeeze cash out of the business before the PE firm sells it off for profit a few years later. The company you knew as a customer is gone and is replaced by a much worse version with less service, higher costs and absolutely no soul. Think Squarespace—they sold their entire business to private equity firm Permira in 2024 and they're already a shell of their former selves.
A full company buyout is not always the case with PE. Companies like ThriveCart and Substack have private equity investors. But those PE firms come in as part of a venture round which is a completely different transaction.
However, it's a big warning when private equity is involved in a company at all because their timeline for return on their investment is about 2-3x faster than what VCs plan for. For example, ThriveCart's PE investor is called LTV SaaS Growth Fund and they say on their website they expect to exit (meaning sell their share of the company) in 3-5 years. Substack's PE investor is called The Chernin Group and they evaporated three companies in a matter of 3-6 years.
Venture capital usually INVESTS in companies with hopes they'll have a successful exit and extract a return for them. They don't typically buy companies outright. Venture capital starts with seed or angel rounds to get a startup off the ground and then continues as the company grows. You'll see tech teams raising Series A-Series E rounds. There's not a lot of venture rounds beyond E because by then, a company can either float on its own (with its own revenue) or it's gonna shutdown for good.
Venture capital firms are definitely bad and they have the same goal as private equity—return as much cash to their investors as possible—but their history in tech is more positive than PE. They're more willing to make risky bets, knowing that not all their investments will pay off. They're investing IN the company, not buying it, so mostly they're backing the existing leadership team and their existing vision. Sometimes, the team is replaced, but VCs try to work with founders rather than taking over the helm of every company they invest in.
It is true that to raise a multimillion round, founders and CEOs have to paint a dramatic, high growth vision for VCs to write those checks. And that creates feature thrash like what we've seen with AI bloating everything and tech companies prioritizing their enterprise audiences over us. Taking any investment at all puts a ticking clock on your forehead with a timeline for an expected return. Your investors will step in if they think you're gonna fumble the ball on that return (this is what happened with Uber, their investors at Benchmark forced founder Travis Kalanick out) BUT typically, you as a customer won't notice massive shifts from a Series B to a Series C, for example. The leaders you knew before a venture round are still at the helm. The vision is still the vision. The tool is still operational. That's a different story once they get close to an exit, but if they're not selling themselves off yet, you're probably still ok.
Both private equity and venture capital are bad for small business because our market is not a moneymaker. Their interests and our interests are not aligned. They want to make a fuckload of cash as soon as possible with the least amount of work and we want to pay as little as possible for high quality service. But private equity is worse. They destroy companies quickly by enacting mass layoffs, cutting features and services, and jacking up prices. A few famous examples include the liquidation of Toys R Us, Joann Fabrics filing for bankruptcy and shuttering stores, and the end of RadioShack.
Private equity exits frequently mean a complete shutdown of the company we knew. Venture capital exits can be mildly ok, like Slack getting sold off to Salesforce. It's not ideal, but Slack is more or less the same product 5 years later. Or LinkedIn selling to Microsoft a decade ago. LinkedIn is increasingly more annoying but it's still LinkedIn. It's not a Spirit Halloween yet.
Know the difference between an investment in the current company AND a buyout by a third party. It determines when you need to be ready to move. Investments are slower change, usually over many years. Buyouts are faster change, usually months to a couple years.
So that's why I say "Goodbye to Airtable."
Bending Spoons, who bought them today, runs the private equity playbook and we don't have many examples (maybe any examples?) of that working out for customers. In fact, it usually goes south pretty quickly.
Related story:
Lex Roman
