apidays LIVE Paris - Responding to the New Normal with APIs for Business, People and Society December 8, 9 & 10, 2020 The Business of APIs: Lessons from building the world's largest API Marketplace Jed Ng, Tech & API Investor

1. The Business of APIs..
Lessons from building the world’s largest API Marketplace
Presented by: Jed Ng

2. API
API
API
Find
API
Test/Connect
API
Dashboard
Payment/
Monetize
Authenticate
at proxy Web App
Mobile App
Enterprise App
Console App
Connected Device
(Provider/Consumer)
The world’s largest API Marketplace
Building the ‘app store’ for APIs

3. API Providers
Discover
• Best-in-class API selection
• Live performance metrics
Connect
• Full-featured tooling (test &
connect, code gen., SDKs)
• Single API key
Pay
• Self-service subscriptions
• Single vendor
Manage
• ‘Teams’ for role-based
access control
• Single analytics dashboard
Developers
Discover
• Customized API gateway
• Featured in collections
Manage
• API Publishing & updates
• Rich dashboard (support &
analytics)
Community
• World’s largest API
Marketplace 1 MN users
• Enterprise Channel
Monetize
• Set own pricing structure
• Billing and collections
Our mission

4. 0
10
20
30
40
50
60
70
80
90
100
2004/01/04 2005/01/04 2006/01/04 2007/01/04 2008/01/04
Global Search Index
SOAP API
REST API
Google Trends data: ‘REST API’ and ‘SOAP API’
APIs are a new business model
‘REST API’ surpassed ‘SOAP APIs’ in search volume in 2008

5. Google Trends data: ‘REST API’ and ‘SOAP API’
APIs are a new business model
De-facto standard: REST protocol hits inflection point
0
10
20
30
40
50
60
70
80
90
100
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20
Global Search Index
REST API
SOAP API

6. $35 BN
Private
$19BN
Market cap
Seed: $1 MN
A round: $3.7 MN B round: $12 MN
$37BN
Market cap
Founded
2008
$1.1 BN valuation
E round - Apr 2015
Founded
2009
IPO
Nov 2017
$1.75 BN valuation
C round – Jan 2014
Founded
2009
$1 BN mkt cap
Apr 2018
7 yr
5 yr
9 yr
Founded
2006
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 201920072006
$3BN
Acquired
$1.5 BN valuation
Dec 20148 yr $41 BN
Public
APIs are a new business model
The Rise of Native ‘pure play’ API companies

7. APIs are a new business model
… AND we are only scratching the surface of available applications
SearcheKYC
Payment
Processing
Email
Lead
enrichment
Communications

8. Public APIs
30,000 public APIs exist today
40% YoY growth on ProgrammableWeb directory
Programmableweb.com, ‘APIs show faster growth rate in 2019 than Previous years’
Growth of APIs will continue
Public APIs will continue to proliferate…

9. API traffic volume - 2016
The Impact of APIs on Firm Performance 2017, API Frenzy: API Strategy 101, The State of APIs 2016
Growth of public APIs will continue
…But API Providers risk being trapped in a ‘digital ocean’

10. Developer Experience (DX) needs to get better
API proliferation and diversity exacerbates DISCOVERY problem…
Last Update: November 2018
The API Landscape
DESIGNED BY
Mehdi Medjaoui
SocketLabs
Rebel
Moosend
SendinBlue
Dyn
CritSend
Pepipost
Authmailer
LeaderSend
Sendwithus Mailjet
Campaign MonitorCustomer.io
SparkPost Mailgun
Postmark
Context.IO
Amazon SES
Elastic Email
PostageApp
JangoSMTP
ShuttleCloudNylas
Email APIs (23)
LucidWorks
Elastic
Sinequa
Algolia
EXALEAD
Search Engine (API) (5)
PassKit
thethings.iO
OpenHAB
IoT API’s (3)
Typeform
Form.io
Picatic
Online Forms (3)
aWhere
OpenDataSoft
WhoAPI
Calcfox
Lingk
Timekit
PredictHQ
Chaos Sumo Omnivore
Data Management API (9)
Payment APIs (32)
Dwolla Quovo BlueSnap Recurly 2Checkout
Kash
Plaid Adyen Lemon Way Mangopay Wirecard
Authorize.Net Marqeta Invoiced SecurionPay
JudoPay
Spreedly Payfirma Paynova Pin Payments
Tramonex
Conekta Payscape PayHub CardConnect
Mastercard API
Flutterwave Payment Rails Push Payments Apply Financial
CulqiWeCashUpGv
Elastic Path BigCommerce
Moltin commercetools
Chec Schema
Semantics3
Campus Credit
Impala
OpenChannel
Ecommerce APIs (10)
Figure Eight Dell EMC ScaleIO
Scale
Checkr
Onfido
Human as a service APIs (5)
BigML
PredictionIO
Nstack
Myra Labs
craft ai
Infermedica
Nexosis
Traitify
Clarifai
Fuzzy.ai
Qloo
Restb.ai
ATN.io
MARKABLE
MonkeyLearn
indico Data
Attentive
Elastic Beam
Spectrum Labs
Seentient
SpazioDati
Wit.ai
Dialogflow
Hutoma
Pingup
Feature Labs
Skim.it
AI APIs (27)
Bings Map
Esri
Google Fit
Intrinio
Withings (formerly Nokia
Health)
Quandl
Smartlane
CB Insights
Estimize
Google Maps
Klappo
OpenLayers
RootAnt
StrikeIron
CINEPASS
Etools
Human API
Mapbox
Page2Images
S&P Capital IQ
UtilityAPI
Clearbit
Factual
Hunter
Mappy
People Data Labs
Samsung Digital Health
WINGIT
Datahoard
Finicity
Infobip
MapQuest
Planet
science.ai
Xignite
Dow Jones
FullContact
InfoChimps
Mattermark
Premise
Skedgo
Motor Data
Envestnet | Yodlee
Geoportail
InfoTrie
OpenStreetMap
Data-as-a-service (46)
C2Call
Clique API
Gupshup
Voxeo
Ambiverse
Stride
Sinch
2600Hz
Italtel
VoiceLayer
Vidyo
Tropo
Esendex
Ryver
Routee
Clickatell
Agora
46elks
Microsoft Teams
Sezion
Nexmo
SendBird
CALLRFacebook Workplace
Telesocial
Bitext
Zang
FlowrouteWavecell
Weibo
Hoiio
TeleStax
Clarify
Plivo
CallFire
Aculab
Apidaze
BrowseTel
4PSAMatrix
Africa’s TalkingRingCaptcha
Cloudonix
Messaging APIs/CPaas (43)
Expensify
FreeAgent
Sage Intacct
KashFlow
e-conomic
Subledger
Debitoor
TrueLayer
Billecta
Accounting (API) (9)Fax/Mail/Voice (14)
TokBox Lob
Bandwidth Interfax
Phaxio VoiceBase
IPerity Sipwise
hSenid Mobile Solutions
Gini
TouchNote Actual Reports
Pwinty Cloudprinter.com
Business processes as an API/API-as a Products (229)
API Lifecycle Platform (129)
Oracle Apiary StopLight
Lucybot ReadMe
SwaggerHub by Smartbear
APIboard Deployd
API Design/Documentation Platform (7)
StopLight Parasoft
Postman
vREST
Paw Runscope
API Testing (6)
DreamFactory Oracle Apiary Restlet Informatica Information Builders CA API Management Apigee MuleSoft
3scale Kony Axway Akana WSO2 Tibco Mashery IBM API Connect Oracle API Management
Seeburger
Fiorano Software Syncano Fuse Mashape Instant API Nevatech Amazon API Gateway
Tyk
Fusio
APInf Netifi Kong RepreZen ApiAxle digitalML LunchBadger ShepHertz Technologies
Gravitee
Microsoft
API Management/API Gateway (36)
Runscope Repustate
Moesif APImetrics
theRightAPI
API Science API Fortress
API Analytics/Monitoring (7)
Firebase PubNub Pusher
DaCast streamdata.io Evercam
Ably Hydna Baasil.io
Gamooga Fanout MyStream
Streaming APIs (12)
Pronovix APICloud
Hitch
Gelato.io
APIMaticRestlet
API-Developer Portals (6)
OPSWAT Centrify SailPoint Ping Identity OneLogin ForgeRock Distil Networks Authy
Bitium Castle LastPass Onegini EmpowerID One Identity Oracle Identity Governance
Gluu Identacor Fallible NetIQ MetaCert SECful Smyte
EnvKey BlueID Crysp Hubrix Apility.io Salesforce Identity Virgil Security Alloy
Access level and Identity management (30)
Pronovix Octo Telematics Apiware
Wildnode LaunchAny
Byteflair Innovation Process
Technology AG
Hexgrid Consulting Onyx Truefit
API Oriented IT Consulting Firms (10)
MachineShop Xively Temboo
Golgi Microshare
ThingSpeak ARTIK
Droplit Structo Sirqul
IOT Platforms/Networks/Devices API (10)
figo NDGIT
Moneythor
bNesis
Flinks
Open Banking APIs (5)
Reindex Scaphold
Meteor
Prisma Tipe
GraphQL BaaS (5)
DreamFactory Orchestrate.io
Restdb.io
SlashDB XtraLife
DBaas (5) Blockchain APIs (5)
Coinkite Block.io
Bitbutter
Qredo BiiLabs
IBM Cloud Algorithmia Pachyderm Spotinst
Protonet Netlify StdLib Binaris
CloudBoost AWS Lambda Cloudflare Workers Auth0 Extend
Infrastructure/Cloud/Serverless APIs (12)
Backend Building Tools/MBaaS (40)
Dome9 IFTTT Usermind Zapier
built.io elastic.io Azuqua
tray.ioCloudWork Moskitos Cyclr
Automation/Orchestration APIs (11)
SnapLogic Cloud Elements
RapidAPI CloudRail
Xapix Visual APIs
Horizontal API Abstractions (6)
Integration Platform as a Service (17) Vertical API Abstractions (35)
Shippo Everoad EasyPost
Delivery APIs (3)
CloudVelox
Kloudless
Cloud Storage API (2)
Shippify
NextPax Shipitwise
Four51 API2Cart
Ecommerce APIs (5)
Imin Medable Channel HBloomAPI Healthgraphic
Eligible PokitDok Redoxdrchrono TrueVault
Healthcare (10)
LoginRadius Auth0 OAuth.ioSAP Customer Data
CloudData
Janrain
Login APIs (5)
PhizzleSegment QrveyConductrics
Marketing/Analytics (4)
Netatmo Technologies
Muzzley
Sensorist Indigo Domotics
Alexa Internet EnerScore
Smart Home (6)
Axway Appcelerator Sencha AnyPresence Kinvey Kii
GoodBarber BrightWork ApiOmat Convertigo
Backendless Kumulos PerfectlySoft Firebase
MBaas (13)

11. Developer Experience (DX) needs to get better
Developers manually sift through dev portals of all stripes…

12. • Thousands of
diverse APIs
• Few established
universal
sources
• Manual
searches
• Domain/vertical
API aggregators
lack diversity
DISCOVERY
• Diverse API
portal designs
• Manual review
• Outdated /non-
existent docs
PROCESSING
• 1 account per
API provider
• 1 key per API
service
• 1 payment per
API provider
• 1 dashboard per
API provider
• No way to unify
API
performance
tracking
MANAGEMENT
• Approval based
access
• Unclear pricing
structures
• Policy changes
and updates
• No trial plans
ACCESS
• Poor tooling
• No self-service
subscription
• API
performance
dependency
CONNECT
Developer Experience (DX) needs to get better
…then struggle with access (approvals, unclear pricing, poor tooling). All of which incompatible with modern
development practices like Agile, CI/CD and DevOps

13. Introduction
..
API Landscape
• New landscape framework
• +Research project (seed stage & later): Participate
APIdays: New initiatives
API-fund.vc
• Vision: The only fund dedicated to API-first startups
• Why: Unfair advantage: Capital, Expertise, Community.
• Get in touch: Startups, LPs
APIs-as-
Products
API Tooling API Platforms

14. It’s all about value
10.3%API adoption confirms a in a firm’s market value
- The Impact of APIs on Firm Performance
The Impact of APIs on Firm Performance, 2017, Benzell, Lagarda, Van Alstyne

15. API ProvidersDevelopers (users)
APIs serve all software
segments
• Single ‘product’• APIs serve all digital interfaces
(SaaS, web apps, native mobile,
plug ins)
Quick, easy integration
• Shorter, more efficient sales
cycles
• Well-designed and documented
APIs easy to integrate
• Developers accustomed to self-
service integration
‘Pay-as-you-go’ pricing
lowers adoption barrier
• Revenue grows as applications
grow in traffic
• APIs services are ‘platforms’
• APIs provide cost-effective
services in software development
High stickiness = low
churn
• APIs are sticky! High switching
costs once integrated.
• ‘If it’s not broke, don’t fix it’
Intrinsic value of APIs
Why APIs can be more valuable than software/SaaS

16. Mkt. Cap: $ 70.5 BN 1
Revenue: $ 1.31 BN 2
53x
SaaS
1- Market Cap as of July 31, 2020
2 – All revenue data based on latest quarterly results & annualized.
Mkt. Cap: € 41.6 BN 1
Revenue: € 542 MN 2
76x 102x
Mkt. Cap: $ 37.4 BN 1
Revenue: $ 365 MN 2
APIs
APIs receive higher revenue multiples than SaaS in public markets
..
28x
Mkt. Cap: $ 46.1 BN 1
Revenue: $ 1.63 BN 2

17. SaaS
APIs
Gross Margins
Gross Revenue
Retention
Net Revenue
Retention
Venture metrics: Comparing SaaS & API businesses
Gross & Net Retention Revenue (GRR and NRR) must drive higher API valuations
Unit Revenue
Low
High
SaaS
APIs

18. Valuation metrics: Net Revenue Retention (NRR)
*note: NRR applies to existing customers only
Net Revenue Starting MRR ChurnDownsell Expansion
Starting MRR Downsell Churn Expansion
*existing
customers
only
New
Customers
End MRR NRR
Company 1 $10,000 - $1,000 - $500 + $2,500 $ 0 $11,000 110%
Company 2 $10,000 - $2,000 - $500 $ 0 $5,000 $12,500 75%
Growth through
existing customers
New customers covering up
churn. MRR tells an
incomplete story

19. Net Revenue Retention (NRR) applied to APIs
…
Net Revenue Starting MRR ChurnDownsell Expansion
APIs less exposed to downsell
than SaaS
• As # customers grow, usage is
more predictable & stable.
• For APIs, downsell happens
when customers’ users are
leaving. i.e. No longer a good
customer
1
API have lower intrinsic churn
characteristics than SaaS
• Switching costs arise from
breakage risk
2
Expansion potential:
API > SaaS
• API usage scales in tandem
with customer growth.
• Leverage ‘growth-on-growth’
through horizontal or bundling
strategies
3

20. What makes a great API company?
A framework for API success
VALUE CREATION
& DEFENSIBILITY
1. Sufficiently large market
2. Source of value (Vertical vs
Horizontal APIs)
3. Defending against
competition
(NEXT SLIDE)
VALUE CAPTURE
TAILWINDS
ORGANIC
ADOPTION
1. Provide a ‘business critical’
service…
2. That customers lack competence
to bring in-house…
3. Use network effects to sustain
competitve advangate
1. Leverage emerging platforms,
technologies, trends e.g.
mobile, cloud,
1. Developers organically
adopt/engage with Git repo
2. Low gross margins = watch
your CAC!
3. Get your marketing stack right

21. Value Creation & Defensibility
..
•
•
H
•
•
•
Vertical APIs
• Value: Solve fragmentation and/or
complexity, ability to scale quickly
• Characteristics: many suppliers/providers +
hard to do technical integrations
• Example: Twilio stitched together telco
networks globally with software.
Horizontal APIs
• Value: Provide complementary, related
services to build a platform
• Characteristics: Standalone services lack
sufficient value. Few players exist. E.g. Fast.co
+ Stripe + Stripe Treasury
• Example: eCommerce APIs bundling log-in,
inventory mgmt., logistics
Arises from:
• Investment (time, cost,
effort)
• Geographic footprint
• Market regulation
Network Effect:
• More providers e.g. Plaid’s
banking network
• More data e.g. ML models
• More usage- bargaining
power & economies of
scale
Incumbents:
• Lack of common
standards/protocols
• Incumbents rely on lacking
technical integrations as a
barrier
Defensibility:
Value
Creation
Defensibility

22. Let’s Connect
jed@api-fund.vc
Participate in API Landscape
research project