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API-first companies aren’t new, but I’ve been paying more attention to them since Marketingwithanoy Disrupt 2021, where I led a panel discussion with Plaid CTO Jean-Denis Greze. Plaid is a fintech company, yes, but it’s not just in fintech that API solutions are emerging – helping to solve a myriad of problems. † Anna
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I was going to try to define API-first startups when I noticed Alex already had. And since it’s not an easy feat, I’ll stick with the same scope: what I’m talking about today is “any startup that either delivers its core value proposition through an API — e.g. Twilio — or is built to use APIs to transfer a particular data — AgentSync , etc.”
The above definition comes from a entry on the API-first companies index launched by GGV Capital, a multi-stage VC firm whose areas of interest include “finding the most promising developer-first software companies commercializing APIs.”
GGV’s dissertation on API-led startups has already led the company to support Authing, Pinwheel, Mindee, Stream and Agora, the latter of which went public in 2020. And beyond GGV’s portfolio, API-focused Auth0 was acquired by Okta for a staggering $6.5 billion, giving the company yet another reason to follow other private companies with a similar approach.
GGV’s index excludes existing companies and ranks the 50 API-led private companies that have raised the most funding. Lacking an IPO, Stripe tops the list, while AI/ML startup Deepgram is the latest to make the move, having raised some $56 million in funding to date. In total, GGV says, API-first companies in the index have raised $12 billion in funding, with $5 billion in 2021 alone.
About 40% of GGV’s API-First Index consists of fintech companies. That’s a lot, but it also shows that there is room for developer-first companies elsewhere. The promise of API companies, GGV wrote, is to “fundamentally simplify software development” — and there’s no reason why it should be limited to banking or payment solutions.
You could also argue that fintech was very characteristic of the first wave of API companies, paving the way for a more diverse set of API-led startups. For example, former Plaid employees launched Stytch, an API-first passwordless authentication platform that raised a Series B round of $90 million last November.
“I understand why a16z says every company is a fintech company, but I think there are other areas that need our attention,” Jorge Madrigal told Marketingwithanoy. He and his co-founder Alex Hernandez are building Vivanta, an API-first company focused on health data.