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Arduino raises $22M Series B round

blog.arduino.cc

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Re: Arduino raises $22M Series B round

#211

Post by martin_a »

eternityforest wrote: post #205
martin_a wrote: post #204

Okay, so Arduino is probably done at this point and we'll just see its downfall. 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.

I have a very hard time imagining the Arduino language going away soon, even if anything happened to the company (I don't know anything about the business world, no idea what's going on with them, seems like they're making some cool new stuff). 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 l…

Thank you so much, I'll make sure to have a closer look at ESPHome!

Re: Arduino raises $22M Series B round

#212

Post by nylonstrung »

coldpie wrote: post #52
nylonstrung wrote: post #35

Earlier quoted context omitted.

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)

Source: I'm a founder and former VC.

Re: Arduino raises $22M Series B round

#213

Post by nylonstrung »

svnt wrote: post #106
im_down_w_otp wrote: post #60

Earlier quoted context omitted.

It isn’t. Venture debt is a whole different thing. Disclosure: is founder who has raised money through both equity financing and debt financing.

Yeah, debt is better for the founder which is why investors want priced rounds.

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

Re: Arduino raises $22M Series B round

#214

Post by nylonstrung »

svnt wrote: post #99
evrimoztamur wrote: post #76

Earlier quoted context omitted.

I understand your concerns, I am just pointing out the general dissatisfaction raised here and the expectation of enshittification being the default. 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…

Except they did not accept funding from PE firms, they accepted it from completely typical VC funds, who state on their websites things such as the following: “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 inter…

This is entirely untrue- this is squarely in the realm of growth investment, for which you're typically underwriting for 3-5x cash on cash returns over a 5 year old period

It is extremely unlikely that these funds see a path to returning >10x

Source: 7 years VC experience

Re: Arduino raises $22M Series B round

#215

Post by nylonstrung »

kriro wrote: post #181
evrimoztamur wrote: post #76

Earlier quoted context omitted.

I understand your concerns, I am just pointing out the general dissatisfaction raised here and the expectation of enshittification being the default. 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…

Maybe things have changed but the VC model is usually unicorn or GTFO. Of course not every company will turn into one but every company they invest in should have the potential. If I'm a VC I invest in Arduino because of two storylines. It's either the "Coke" of microcontrollers (sticky brand) or the "Github of microcontrolers" (sticky platform via IDE) or a combination of both.

VC as an asset class encompasses a lot of different risk/reward profiles

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

Re: Arduino raises $22M Series B round

#216

Post by svnt »

nylonstrung wrote: post #213
svnt wrote: post #106

Earlier quoted context omitted.

Yeah, debt is better for the founder which is why investors want priced rounds.

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.

Re: Arduino raises $22M Series B round

#217

Post by nylonstrung »

svnt wrote: post #216
nylonstrung wrote: post #213

Earlier quoted context omitted.

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.

This type of convertible note you're describing is almost never used these days.

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

Re: Arduino raises $22M Series B round

#218

Post by coldpie »

nylonstrung wrote: post #212
coldpie wrote: post #52

Earlier quoted context omitted.

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) Source: I'm…

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.

Re: Arduino raises $22M Series B round

#219

Post by svnt »

nylonstrung wrote: post #217
svnt wrote: post #216

Earlier quoted context omitted.

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.

This type of convertible note you're describing is almost never used these days. 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

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.
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