How to reanimate a zombie startup

Reviving the Undead: Strategies for Reanimating Zombie Startups

The discussion at Web Summit Lisbon 2025 delved into the concept of “zombie startups.” Ms. Zainab Al Sharif defined these as companies that, despite initial high growth expectations, experience flat growth for several years. For developers, a startup enters the “zombie stage” when it begins to act as a “stage developer,” indicating a lack of forward momentum. Identifying these areas of stagnation is the crucial first step in addressing the problem.

Mr. Michael Lints highlighted that founders often struggle with denial regarding their company’s status. They might perceive their business as still amazing and generating revenue, even if it’s not substantial. This denial prevents them from recognizing the need for intervention. The initial challenge lies in helping founders acknowledge the problem and identify the specific areas requiring development, whether it’s the management team, market acceptance, or other operational aspects.

Effective communication is paramount. Mr. Lints emphasized the importance of honest conversations with founders to align expectations for the company’s future. Ms. Kristina Lucrezia Cornèr added that founders might not always share the same perspective as investors, making dialogue even more critical. Acknowledging a crisis and taking decisive action can transform it into an opportunity for strategic policy changes and revitalization.

Ms. Al Sharif suggested that companies should leverage crises by identifying different revenue streams and scaling their business, rather than being constrained by existing limitations. She stressed the importance of recognizing and utilizing all available resources. Mr. Lints further advised founders to engage with all stakeholders, including investors, clients, and their internal teams, to discuss expectations for personal and business growth, and competitive positioning.

A practical example shared by Mr. Lints involved a company during the pandemic that successfully reanimated by returning to its core business and divesting non-essential activities. This demonstrates that drastic changes, akin to a sports coach making significant team adjustments, can be necessary. Investors, like Ms. Al Sharif’s firm, play a role by providing advice and access to mentors, guiding founders in areas needing development.

The ecosystem plays a vital role, offering opportunities for broader learning and partnerships, and enabling companies to expand into new markets. Ms. Al Sharif mentioned CUSPCE’s approach of building a community of companies for collaboration and product selling. However, reanimating a zombie startup is challenging. Mr. Lints indicated a success rate of only 5% to 10%, while Ms. Al Sharif noted that even one successful reanimation from the market is a positive sign.

Mr. Lints detailed investor actions, explaining that if a company fails to raise capital for 12 months and operates under an underpriced facility, it faces a 10% write-down. Further inability to recover leads to additional write-downs. Despite the low success rate, the panel highlighted the importance of continuous evaluation, honest communication, and strategic adaptation to transform struggling ventures into successful enterprises.