The Second Act of API Marketplaces

RapidAPI, a startup that has developed a marketplace for publiccly available APIs, recently announced a $3.5 million round led by VC power-house Andreessen-Horowitz with firms such as SV Angel and 500 startups also participating in the round.

The funding even might come as a surprise as the API marketplace concept is far from novel and it wasn’t exactly super successful in its first iteration. However, somehow the API management space has come full circle and API marketplaces are experiencing a successful. To understand this, it might be useful to take a quick review to the recent history of API technologies.

Started with API Marketplaces

A few years ago, API marketplaces were proliferating with companies such as Mashery, Apigee or Mashape dominating the space. During those days, the focus of API marketplaces was to help API providers to market and monetize their APIs. Despite its popularity, the business model of the first generation API marketplaces was only partially successful and the monetization channel proven to be ineffective.

Pivoting to the Enterprise

The rapid raise of APIs in the enterprise caused many of the early marketplaces to focus on that new channel. Apigee emerged as the undisputed leader of that phase of the market with platforms like Mashery of Layer7 as not-so-close seconds. Mulesoft’s Anypoint also became a relevant platform in the enterprise for Mulesoft customers.

Initial Market Consolidation

The acquisitions of Mashaery bu Intel and Layer7 by CA marked the initial wave of consolidation in the API market. Throughout this phase, Apigee rapidly expanded and modernized its Edge platform consolidating its leadership in the enterprise space.

PaaS Vendors Enter the Market

PaaS incumbents such as Amazon, Microsoft and IBM all launched AI management technologies as part of its cloud platforms. Those stacks have become widely adopted by developers building solutions on those PaaS stacks.

Apigee Goes Public

A pivotal moment in the API management market was the IPO of Apigee in April 2015. Even though the stock has had a tough ride in public markets, the IPO certainly consolidated Apigee as the clear leader in the API management space.

New API Platforms Emerge

A simpler, more modern, highly extensible, open source and developer-focused generation of API management technologies have started to capture the attention and favor of developers worldwide. Technologies such as Tyk and Mashape’s Kong are examples of those technologies that are slowly but steadily capturing relevant market share.

More Consolidation

A second wave of consolidation started to take place in the API management market a few months ago. After acquiring Mashery, Intel sold the platform to Tibco. RedHat acquired API management platform 3Scale to expand the API capabilities of its enterprise stack. A few weeks ago, Google acquired Apigee which is likely to become a very very relevant component of the Google Cloud platform.

Back to API Marketplaces

Technologies such as RapidAPI mark the return of the API management space to the marketplace segment. The key to this new iteration of the API marketplace model is to drive the right balance between API providers and consumer developers. The focus on developers in areas such as API discovery, testing and monitoring is, in my opinion, essential to make this new phase of API marketplaces successful.

CEO of IntoTheBlock, Chief Scientist at Invector Labs, I write The Sequence Newsletter, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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