Arduino raises $22M Series B round
blog.arduino.cc
blog.arduino.cc
I am surprised like another commenter that Arduino has to raise money, on the other hand. I wish it was a bit clearer on how this money ties into their strategy, are they planning to fund R&D, marketing, or manufacturing. What will Arduino look like in two years, and which stick are we getting enshittified?
I would also like to point out that you are extrapolating a bit too hard. The claim that backers will want a 10x return is not necessarily correct, nor are the examples of 220/540m valid from a valuation perspective.
There are PE firms which do not seek such exorbitant returns. Without having eyes on Arduino's financials, it's hard to say that the growth expectations are as noted. As for the valuation, the implied post-money (i.e. after-investment) valuation depends on for what percentage of equity the 54m was offered for (where the implied post-money valuation would be 54m divided by the percentage, e.g. 108m with 54m paid for 50% of ordinary shares). Other factors such as preferences etc. impact this too.
I wouldn't be so eager to get mad, that's all. I am still hopeful for Arduino's future and hope that they put the capital to good use (instead of '10x'ing it).
“Anzu Partners is an investment firm that focuses on industrial and life science technology companies with the potential to transform their industries.”
“[CDP Venture Capital seeks to] foster the growth of the Italian market by attracting new national and international investors to the Venture Capital asset class by promoting a new culture of Venture Capital and entrepreneurship in Italy.”
In case you are unaware, these statements are VC dog whistles for not 10x but 100-1000x returns, without some probability of which the VC model does not work financially.
It is extremely unlikely that these funds see a path to returning >10x
Source: 7 years VC experience
What you're describing is more typical of a seed fund that is counting on one deal to return the portfolio
In a growth deal like this, esp with such an old company by VC terms, funds tolerate lower upside in exchange for capped downside and predictable returns, given that the chances the chances of complete failure/bankruptcy are comparatively less
They're worth more than the money they raise. Unless they passed on 100% of the company (which they didn't)
What kind of market does Arduino expect to get into with that money? I can't see any.
Maybe professional users like Raspberry Pi did (with the known consequences)? Getting out of that hobby/tinkerer niche with lots of counterfeits from China is probably something to strive for.
For Raspberry Pi, those mobile phone SoC are rather difficult to source. You need to have contact with the SoC vendor to get a hand on them.
But yeah, maybe they'll use the money to get some cheaper wholesale products. Or maybe they'll expand their hardware to fully support low-scale IoT.
I'm not sure there is enough potential for low-scale IoT for that investment to pay off. But doing something cheaper can indeed work, and requires some money.
Too bad they aren't explaining what they'll do. The buzzword density of the article doesn't add any confidence that the company managers know what they are doing, but it could be a smoke screen.
You know that, of course, but really the thing is that the sentiment here is information-free and an indicator of that is the inability to tell the difference between debt and equity. i.e. the sentiment and the result are independent events.
I also think the cynicism hits extra hard when this happens with direct-to-consumer and educational companies. I don't think people care quite so much when a B2B company takes a round of funding because whatever change happens there is not something that will likely hit consumers directly, and of course the whole for-profit educational aspect has been been beaten to death.
I think it has changed over time. There used to be an absolute jerk fest in the comments section on VC funding years ago.
We may be under the roof of a VC but the site is called Hacker News. Not everyone is gonna be a fan of startups.
It's a very interesting usage of "despite".
- People who know HN are more likely to know Y Combinator.
- People who know Y Combinator are more likely being following news about startups or working for one.
- People who follow news about startups are more likely to witness things going bad after receiving VC funds.
VC funding demands VC results. It's the only path forward.
I'm the CTO for a small software firm that does a lot if IoT. We've seen a number of startups build their prototypes using Arduino. Historically, there was no clear path to production. So, I think they're listening to some of their customers, and it is a clear opportunity for them.
On the other hand, positioning yourself as a hobbyist platform, _and_ a "production-grade" platform is tricky. I really like their entry-level boards for hobby-level things. I hope that continues.
Finally, a few thoughts:
1. If you dig into their code, their embedded software has struggled: the architecture is all over the place, the implementation is suspect in some areas, and testing has been weak. Hopefully they back port the new (hopefully improved) code to the hobby hardware.
1. As long as they don't require their cloud, I wish them well in that area. It's a really tough market.
However, this easy was slapped together in the most unprofessional ways imaginable. IIRC, the SD card code used to have C++ virtual functions when a rock solid library from Chan was available. It was not easy built on a solid core that provided a gradual path to professional setups. It was do-it-and-happy-when-it-works kind of setup.
So I am not sure what direction can they take it in with funding. There is a limit on where easy can take you in the Embedded world, especially if you are looking for reliability and performance.
I feel like 1 is getting to be much less of a blocker for a huge variety of applications. Most hobbyists don’t even bother with the dedicated built in “spi” pins, they just do spi bit banging on whatever pins they want to use because they don’t have a performance reason to worry about it.
2 is still an issue, and is largely what arduino was trying to solve (for hobbyists at least), by creating a standardized set of tools and libraries.
From that perspective, there is still a lot of work to be done. Modern languages can offer a huge amount of zero cost abstractions for things like HALs, if you can make it easy enough to write the underlying translation layers so you can actually run on the combinatoric explosion of different software options out there. If arduino can make that kind of thing possible, I would assume they could make inroads into the professional world.
1) They're doubling down on enterprise-grade features "with the goal to grow enterprise application libraries"
2) They're doubling down on enterprise GTM "we will use the additional funds to accelerate go-to-market initiatives and customer support in selected areas."
3) Finally, they hired someone to lead their enterprise efforts in the US who has consulting experience: https://www.linkedin.com/in/guneetbedi/
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
Not with $54M in debt to service. This is a death warrant. I'm sure the execs will make out nicely, though.
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.
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.
So... It's completely equivalent to a low preference loan.
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...
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.
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
> diminishing the payout the founders would get if the company pays dividends or is sold
That’s VC debt
Disclosure: is founder who has raised money through both equity financing and debt financing.
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
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 I VC I talked 1000s of companies fundraising and it was not something founders ever sought out
SAFEs are almost always the alternative to priced rounds
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)
Source: I'm a founder and former VC.
Just checked aliexpress.com. You were not kidding - $1-2 per item!
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.
If the Arduino IDE becomes a pain point I'm sure an open IDE (or VS Code plugin?) will step in. (There may already be such a thing?)
Edit: another comment suggests PlatformIO + VS Code allows you to avoid the Arduino IDE.
s/allows you to avoid/is highly preferable to/ :-)
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.
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
The market has moved on significantly from when they first started (Raspberry Pi having launched things like the Pico etc), and there is a large amount of competition, so I do wonder if their growth aims are realistic.
Companies like Adafruit, Sparkfun, and Pimoroni leapfrogged their hardware products, and eventually ended up developing their own ecosystems when it turned out that the Arduino IDE was more of a liability than a boon.
They were a no-brainer in 2005-2010, but why buy from Arduino in 2023 when you can get a newer product with more features at a lower price from their competitors?
Many eons ago before the Arduino came out, I used to have EE labs in university based on the same Atmega chip but using a commercial IDE-compiler, and boy was that a giant PITA as a young buck, having to read dozens of datasheet pages, calculate by hand all the register values just to get a bloody 1 ms PWM timer output on a pin, which never worked the first time and needed an oscilloscope to debug.
"Oh, you did everything right, but forgot to flip the bit of the correct pin of the output port in the right registry, have fun debugging it for the next 3 hours while you pull your hair out."
And we used "modern" C, not AVR assembly (which is still nice and quite simple to understand once you get the hang of it, don't get me wrong). Sure, as an EE, that was a mandatory right of passage to prep you for a job in the industry, but not something average people would want to do as a hobby.
The fact that you can do that with 2 simple lines of code, from an API, from a well documented library, that's well tested and guaranteed to work, without an expensive commercial toolchain and HW debugger, was the game changer for the hobbyist market.
But this move feels a bit late in the game for them. They should have done this nearly 10 years ago, but now it feels like they squandered their early lead and became sort of irelevant amongst the sea of RPi, ESP32, STM32 with their own easy to use toolchains and libraries.
Interesting. Personally I find the $OFFICIAL_IDE repulsive, and strongly prefer just writing the code in $MY_IDE, with a Makefile on the side. OTOH I find the "branded" hardware attractive: it's a known quality in an ecosystem that I sometimes find complex and confusing, and I greatly appreciate the work they've put into making the whole process more approachable. Of course I have a couple clone boards at hand, but I will buy branded Arduino by default precisely because I instinctively associate the brand with less hassle.
< Insert famous HN comment, on why Dropbox is a useless business idea, berceuse you can easily achieve that for free with a self hosted FTP server[1] >
If you know what a Makefile is, then you're not Arduino's target market, but there are millions of people out there who want to turn a relay ON when some sensor gets too hot for some garage project, without first learning about Makefiles or registers.
I am arduino targey market and I know makefiles, I hate them with a passion. One must know his enemies better than he knows himself
I honestly don't see how such strategies work long-term though. As a former embedded SW engineer, the Arduino IDE seems very toy-like - which is excellent for people just starting out, but not something a company developing an embedded product is likely to use. I think PlatformIO is similar but I have only tried that once.
If these companies try to get vendors to pay them to support their boards, or try to start charging users directly, I really think that the hobby community will move on and someone will fork or create their own solution, and the whole cycle will start again.
Platformio is a package manager for embedded systems
That phrase encompasses a huge amount of value. VS Code+PlatformIO is free but I would happily pay for it. I was already paying for an Arduino Visual Studio plugin (Visual Micros) before I learned about it.
I've used to maintain my own set of Makefiles for AVR, and that was mostly OK because avr-gcc is in ubuntu repos, and all my computers are Ubuntu anyway.
But when I switched to ESP8266, this no longer worked, there are no nice debs with SDKs I could find. I could have created a complex set of Makefiles to download SDKs, compilers and tools.. but I switched to platformio instead to do it all for me.
This turned out to be a great idea when I later wanted to try STM8 and RP2040 - just 2 line change in ini file and you have a fully working toolchain, libraries, etc.. And the ability to easily share the programs with others and to know that they can use them even if they don't run Ubuntu is great too.
That entire sentence makes me want to jump off a bridge.
Fools and their money are easily parted, even easier if you slap "Ai", "Enterprise" and "Cloud" in the pitch.
Anytime I see the business speak 'accelerate go-to-market initiatives', the company is at its end-game. Any time a leader has to call that out, they are admitting they need to spend a substantial sum of money to solve a problem a small group of kids in a garage can do with some Red Bull.
Every time a cool little company gets VC funding, you know that the free and opensource projects will dry up, and before long they'll be making premium high end products and suing anyone who tries to compete.
And there are a good number of devices on the shelves of stores today which contain the arduino bootloader. It turns out the "point and click and get a working IoT product" tends to outcompete hiring a professional embedded coder to spend months to make something bespoke from scratch.
My dumb fridge for example runs on top of the arduino bootloader on an atmel chip - it has the distinctive 1 second startup delay and speaks stk500. And all that chip supports is four temperature sensors, two fans, two door switches and lights, a little 7 seg display and up/down buttons for temperature, a defrost heater, door edge heater, and a relay for the compressor motor.
If I get a board with an Arm0 chip and want to flash it with micropython, Arduino is not the only game in town (not even my first choice by a long shot, ymmv)
With the lower power AVR chips, Arduino's only competitor was the project it was forked from, Wiring - any other embedded toolchains were not even trying to reach the casual hobbyist, the Arduino IDE dominates that niche.
Setting up an embedded toolchain and development/debug workflow from scratch is so tedious. No wonder Arduino (and Micropython) has had so much success. I write Micropython for flight controllers in the High Power Rocketry hobby. I get a lot of snide remarks from the other people doing embedded coding but my stuff runs just fine and i can get to a blinking LED (the helloworld of embedded) on a new board in ..seconds typically.
Those remarks tend to stop when you can add some new feature in 5 minutes which would take a 'proper' embedded dev days.
Eg.:
Gee, it would be nice to measure CO2 high in the atmosphere from our hobby rocket, let me just plonk this CO2 monitor in, hook it up to 2 pins, and add 3 lines of code to read from the sensor and write to an SD card file every second.
Thats the kind of thing that, for most other toolchains/IDE's, would require reconfiguring HAL's to get I2C working, configuring the pins to have the right drive strength and pullups, studying datasheets to find out what registers to read/write to get the sensor going, etc...
A lot of the hobbyist stuff is moving to MicroPython / CircuitPython, PlatformIO is eating the more hardcore market, and professionals will just stick to whatever RTOS & HAL they were already using.
But if anyone tries to ship arduino code in a commercial product, they'll want royalties.
Or if any microcontroller maker wants to be supported by the ecosystem, they'll also want royalties.
And the royalty levels will be low because there are competing ecosystems of tools - but across such a huge market of embedded commercial electronics, I think they'll still do very well.
I disagree. In companies with an embedded software team, no. But in companies where software isn't a focus of what the company does, there are plenty of bits of arduino code shipped on millions of devices. For example, my Beko branded fridge (they sell 3 million fridges per year). And my unbranded motion-sensitive security light.
Arduino had more impact at making people aware that tinkering with controllers might be fun (or profitable) than the actual amount of tinkering with Arduinos (or clones) suggests. Aiming for that "not the core job description" subset of professionals seems like a very good match.
As a professional embedded systems engineer, I'm not the "ideal Arduino customer." But having the arduino ecosystem available means that I can build a one-off for a client in a matter of minutes when it would otherwise take days or weeks. That means I become the "embedded mercenary" that they like and want to hire again :-)
VC's don't like to leave money on the table, and there's a long history of companies going back on their promises to their users in the years following accepting VC money.
When the farmer came the first time the turkey hid full of fear, but the farmer came and instead of death and fear brought food. The farmer took care of the turkey, feeding him well, making sure he had a warm place to stay. All along the chickens warned the turkey, the farmer was going to come and eat him, but the Turkey thought.
"The Farmer is so nice, he takes care of me so much and loves me, these chickens don't have any idea what they were talking are talking about. They are just foolish scared chickens", the turkey thought.
Then one fateful November day instead of a bag of feed the farmer brought an axe....
Many tech people have seen this happen over and over again, they know that when the VCs come, eventually so will the axe.
You don’t know Arduinos master plan.
https://support.arduino.cc/hc/en-us/articles/4415094490770-L...
Not-legally-binding tl;dr The "duino" suffix could be a trademark issue. If you rename it and you keep your hardware designs open source you're fine. Otherwise contact them for a proprietary use license.
YOU are not going down that path.
But investors are now the ones shaping the paths.
Arduino is hardly the first company to take on VC money. Everyone here is intimately familiar with how it always plays out, and the dynamics that will force around even the most pure hearted leader.
It's best not to say anything, you are only going to look foolish trying to explain to a bunch of veteran tech heads how "This time its different!".
> After the first $32 million Series B financing received in 2022, “This investment will allow us to further fuel our transformational platform initiative for professional customers, lowering the barriers to entry in IoT and AI by providing a continuum from hardware to Cloud,” says Arduino’s CEO Fabio Violante.
We do sell services but we try to avoid bullshit terms like "servitization"
Just pinky promise me that you won't make Arduino IDE a subscription :)
But professionals have different requirements, and are willing to pay for tools that work well. Opening up a professional channel only makes sense if it's buttressed by a large ecosystem outside, with the pressure to keep using Arduino, because it's well-known, hardware is tried and true, hiring is easy, etc.
So, if anything, Arduino the company now has more incentives to make Arduino widely accessible among kids, students, hobbyists, etc.
Got it.
But keep in mind that people that talk in buzzwords are often not reliable.
I know this is written for the investors, but it makes your potential professional customers feel a little sick.
Accepting VC funding 99% of the time means that is the route they plan to go.
Arduino started out as an open-source project, with further development funded by the sale of physical hardware. They did not need tens of millions of VC funding for that, and they independently developed the "cool stuff" people here care about. Unlike most startups seen here, they were not selling stuff at a loss in the hope of conquering the world and somewhere along the way hopefully figuring out a way to make money. Arduino could've probably continued doing this for decades, but instead they stagnated and were leapfrogged by their competitors.
They only need to raise VC funding in order to expand into new markets because they want to pivot towards "professional engineers with enterprise-scale applications".
Look, I had fun with Arduino back in the days, but in 2023 you folks simply don't have an attractive product range anymore. When I open Adafruit's website I am almost guaranteed to immediately be greeted by a handful of brand new products which immediately look interesting to me. When I open the Arduino website I have to do a lot of effort to even find a product lineup, and even when I manage to finally get there it isn't at all obvious what I should buy and why.
I own several Arduino products, and I genuinely forgot you existed. For your sake I sincerely hope I just live in a massive filter bubble and am massively mistaken about the hobbyist market.
- Oracle
- Broadcom
- Walmart
- MicroStrategy
These companies have most enshittified products than most other companies, so it is not the VC money that leads to it.
They never interfere today, but we all know what happens when money dries up and VCs want some return on their money.
For some more recent boards, there are proprietary components and binary tools and blobs - notably the Expressif board packages for the ESP8266 and ESP32's. At least some of the blame for that is with the chip manufacturers and not the Arduino project.
You're not disagreeing with parent commenter and could both be correct!
> Our investors leave free to work on whatever technology and let us open source anything we feel can contribute to the community. They never interfere
At some point, they will expect, then demand returns on their investments, then your focus will mostly be on the professional offering, while the community product gets less love.
It's not a condemnation of your as an individual or your organization: this cycle has played out many times via VC or acquisition.
The Arduino corporation has been a great benefit to open source but it's also a classic trope of an advisor taking credit (and profits) for his students' work.
What will happen if you don't make the returns they expect? Do you have a controlling share, or is it possible for them to fire you and replace you with a more compliant CEO?
This sort of thing tends to be a collaboration, until the growth doesn't meet expectations.
I'm also biased since I'm building a vc backed product as well.
Super stoked to see how your professional and enterprise offerings turn out. Do you have a public roadmap anywhere?
Even if they completely reverse their open-source approach, I’d still be grateful for the tremendous contribution Arduino has made to education.
By the way, the best way to support Arduino as an individual is to only buy official boards directly from their site.
If you dig even deeper you will find http://arduinohistory.github.io describing how Massimo Banzi stole open source project from one of his students.
Now it's doing more damage by continuing to push an "Arduino" ecosystem separated from the realities of building production grade software.
What is the antidote to this trend?
They'd basically need to lose all protection on their product, making it a de facto open source (note that there are companies operating on open source stuff, but they actually make money out of the things they don't open source - such as "pro version" or know how). Plus, investors value the pool of recurring customers far more than basic cash flow or such (because you can squeeze them more) and the next best thing is customers you can make recurring customers by moving your product to a subscription model.
I will be forever grateful for them helping build and expand and popularise the modern hobbyist embedded world.
So that doesn't mean that Arduino is on anything great: it just means it has been able to convince VCs that there's _some probability_ that they will make it big.
But the probability of doing something big is still very low...
( In fact a VC once told me that, 3 months after investing - i.e. a few board meetings max - he already knows if the company will succeed or not. And in 8 out of 10, he will just do the figuration until failure - at best, buy for cents on the dollar)
Congratulations also. Getting here and raising a significant amount of money is never easy.
Which leads me to the question: Is there an IDE/language that is as easy as that of the Arduino IDE? PlatformIO is often mentioned, but I don't speak C/C++ and am not really into learning it.
The community will maintain it. Pretty sure the more interesting implementations aren't even by Arduino (doesn't Espressif do theirs themselves?).
I wouldn't be surprised if long term, we started seeing an Arduino competitor in Rust, the hobby space is the perfect place to start something like that, but for now, I would think Arduino is safe...
Also, you already know C++. Maybe not C, but that's OK, because everything a hobbyist needs to pay attention to is C++. Arduino is just some libraries on top of C++. A really nice and portable set of libraries, with a really cool and easy build process, but not the only set of libraries.
PlatformIO is pretty nice.
But there is something easier than Arduino. ESPHome. It's a YAML declarative kind of thing. Not as general as Arduino but for what it does, it's amazing.
Vastly easier, clearer, and just generally nicer than just writing code, especially when it comes with so many nice features like logging, a web server, and an amazingly reliable LAN API you can call from Python.
They even have OTA updates.
Right now it's got a few missing things, like light sleep, but I suspect it's going to cover a lot of Arduino use cases.
They have a web dashboard written in Python you run from the CLI.
AI by providing a continuum from hardware to CloudOh! I want to hear more about what they’re doing in Chicago since I’m in Chicago.