RapidAPI, the startup that has built a platform that helps businesses find and integrate third-party APIs, as well as manage their own usage of their own internal APIs, has picked up another big round of funding of $150 million — underscoring both its growth and that of the so-called API economy, where digital services that are often complicated to build and run from the ground up are being built once and turned into extensible units by way of APIs that in turn help power functionality wherever those APIs get integrated.
The company will be using the funding to continue building out more API functionality, Iddo Gino, the CEO and founder, told TC, building on its existing API Hub, which in recent months has seen the addition of API testing tools and development tools.
“We want to build a full OS for API usage,” he said. “It’s a broader use case than just using and sharing them.”
The capital infusion, a Series D, is being led by SoftBank’s Vision Fund 2, and it catapults RapidAPI’s valuation to $1 billion. Other investors in the round include Qumra, and previous backers Andreessen Horowitz, M12 (Microsoft’s Venture Fund), Viola Growth, Green Bay and Grove Ventures. For some context on that valuation, it’s a huge jump since last year: When it raised a Series C of $60 million in April 2021, it was valued at just $355 million, according to PitchBook data.
The funding comes on the back of a strong period of growth for RapidAPI, which added 1 million developers to its user base in the last year, bringing the number to 4 million overall, with revenues growing 110% in the same period, Iddo Gino, the CEO and founder, told TC in an interview.
RapidAPI is built around a “freemium” model and as it has grown (based on the fact that some APIs are free to use, and some are not), it’s also picking up more paying users. Gino said that today the company’s user base is roughly evenly split between self-service individual users and enterprises, and among those individuals, some 25,000 signed up for paid plans in 2021.
RapidAPI’s rise has mirrored that of APIs themselves: The startup estimates that some 95% of businesses with a digital component to them use at least one (but usually more) APIs. And according to a report from Postman, another API company, usage went up by 56% in the last year, with some 17 million people currently using APIs in their developer work. So as the usage and ubiquity of APIs continues to grow across organizations, so too has RapidAPI’s business, not just in terms of demand for the products it already provides but in terms of opportunities around what it might build next.
“We are becoming a full suite of tools, anything you might need for API usage,” he said. “When we started the main value proposition we were a marketplace for finding APIs. Now we are also being used by organizations to build those APIs. We are looking at every piece of the journey.” Some of that expansion has come by way of acquisitions — for example, last year it acquired API development tool Paw — and some from organic development.
The early days of using APIs was about building in more efficiencies to a business — where integrating functionality built and maintained by another company, or simply making it easier to use functionality that you have built internally across the organization in the case of an internal API, was the aim. “It was a question of, do you invest $2 million dollars into building something, or do you pay $200,000 annually for a license,” is how Gino described it.
Nowadays, API usage is so ubiquitous that this kind of calculus is a given, and the focus is more about how to use APIs better, and to make sure that organizations are in control of them.
Realistically, Gino said, there remain a lot of gaps when it comes to APIs. These might be in areas like managing APIs with regards to network security, or in how they relate to data governance. There are still many businesses out there, he said, that “don’t know even how many APIs they use, or what the schemas or rule sets look like. Getting that visibility is super valuable.”
“Demand for digital solutions and software innovation is increasing rapidly, and without enough developers, the world needs APIs to continue building software,” said Nagraj Kashyap, managing partner at SoftBank Investment Advisers, in a statement. “We believe that RapidAPI plays a critical role in supporting the API economy and has demonstrated impressive growth and execution to accelerate developer adoption and supply of APIs. We are excited to partner with Iddo and the team to support their mission to drive modern software development.”
“We’ve invested in RapidAPI early on – with the vision of creating a nexus in the nascent API economy and empowering developers to leverage the wealth of APIs available to them,” added Martin Casado, general partner at Andreessen Horowitz. “I’m very excited to see how RapidAPI has been able to scale that vision, combining innovation and action to scale its public API hub and bring it to some of the largest enterprise companies in the world. The addition of new team members to its world-class leadership team will enable RapidAPI to continue their upward trajectory at the rapid rate of the growing API economy.”