Sounds to me like another nail in the coffin for Arduino as a useful tool for hobbyists.
That said I stopped buying Arduinos years ago and started buying super low cost ESPs from China and I think most other people did too so I guess it's not going to be a huge blow
Yup. I switched to ESPs for projects and won't go back to Arduino. I had to fix someone else's Arduino based art installation a couple weeks ago and it seemed weird and very retro going back to work with that Arduino form factor.
That said, maybe they have a future being a standard component in industrial settings. I would tend to trust an Arduino more than an ESP in critical infrastructure.
> I would tend to trust an Arduino more than an ESP in critical infrastructure.
Arduino has always come across to me as being for hobbyist/beginner/learning, and critical infra would use things more like, for example, STMicro or Texas Instruments microcontrollers
They didn't take debt— they sold equity in the company.
In reality this makes the company MORE financially healthy, while diminishing the payout the founders would get if the company pays dividends or is sold
I mean, it's not free money. The people who gave them the money expect to get the money back plus some profit. Whatever fancy financial words people like to doll that up with, it still sounds to me like debt.
It's literally not debt. Debt is when you borrow money or issue bonds with obligation to repay the principal, plus interest
This is an equity investment: the VCs buy an ownership stake in the company, which they share with the founders. They don't receive "profit"- they get a payout proportion to their ownership stake if the company is sold or retained earnings if the company issues dividends (not common)
I understand, but it doesn't seem like an interesting distinction to me. It's all just different financial ways to say the same thing: they got money from someone and will be expected to pay it back with even more on top somehow later.
Neither is "better" or "worse" for the founder- this is entirely dependent on terms.
This is like saying a credit card is "better" than a home equity loan
As with equity there are MANY investors that only deal in debt- SVB's debt army for example.
Debt is problematic as it weakens the P&L by requiring the company to make interest payments. The rates of which (in venture) are currently in excess of credit card APRs
I’m speaking specifically of early investment in debt, which does not have the impacts you describe and is typically intended to convert to equity. In my experience it is better for the founder than a priced round in basically every sense.
However it is easier to wash out and leaves no cap table trace, which is why some investors do not do it very much anymore.
As a VC you would be talking to people seeking priced rounds, not convertible debt. Angels started using SAFEs because YC started pushing them. It doesn’t mean that convertible notes aren’t better for founders. Founders will conform to the market.
They have been cheap for many years. There are so many great cheap options out there now with good support, ESP, ESP32, Raspberry Pi Pico, Pico W, WeAct Black Pill (STM32), various nRF2 boards.
At this point Arduino is just extremely overpriced and probably only still relevant because it's a household name and people want pin compatibility with the Uno and V5 tolerance for reasons.
How do you have a 100M business selling cheap, niche microcontrollers to hobbyists? They're starting to pursue a subscription model (Arduino Cloud), I'd expect them to shutter products that won't work with the subscription model and require everything else to use it. It's your standard enshitification play.
"Supporting" and "inspiring" hobbyists isn't going to pay the bills, though.
Arduino opened up an ecosystem when they started back in 2005, but the world looks a lot different in 2023. First-party Arduinos are nothing special these days, and their competitors make way better products for far less money. Even the Arduino IDE has been leapfrogged by MicroPython / CircuitPython.
Hobbyists these days just aren't all that interested in Arduino anymore, and there is pretty much nothing paid which they can introduce which will change that.
There isn't any debt to service. Taking funding isn't the same as taking debt (in some ways its worse, in some better), and there's no direct interest or payment they have to make every month like if it was debt.
The problem is that they give up ownership (and probably ownership) to people who may have different goals and values. This can lead to enshittification, especially for a company that doesn't have a good path to extreme growth and profits. You also can't discharge ownership in bankruptcy like you can with debt.
It is not debt, but on other hand anyone investing this pay probably have expectation of return that is higher than a loan would be. And that money must come from somewhere at somepoint...
It's not a loan because it doesn't have to be paid back.
But it operates somewhat worse than a loan because the buyer now has some say in how the company is run, and they will want to see a return on their investment eventually.
A loan may be better because as long as the company can service it, the lenders have no say in how the business is run, and they get no additional profit from increased income/profit of the business.
Technically a VC with less than 50% control can’t do anything to you, so as long as you keep 51% and never sell or liquidate then it’s free money. In practice, they wind up pressuring you to do those things and then they get their money back.
VCs, historically, don't understand this. Arduino did, but they've likely ceded some control by doing this fundraising. Maybe these VCs are different. I'm not counting on it.
You need either at least an order of magnitude more (still iffy, people don't buy boards all the time), or to sell into some larger market. Are there 100M electronics hobbyists to sell to over the world? Maybe if you make it into schools...
That said I stopped buying Arduinos years ago and started buying super low cost ESPs from China and I think most other people did too so I guess it's not going to be a huge blow