what do investors look for in api startups?
DESCRIPTION
An shorter introduction to APIs Startups from a Venture Capital point of view. Starting with the major characteristics of API startups from business model point of view, and how do investors evaluate API startups. As presented in APIdays http://apidays.io/TRANSCRIPT
What do Investors
Look for in API
Startups?
@rodrigoMrz API days Mediterranea
About us
@PointNineCap ● Berlin-based, 2011
● 45mEur
● Seed & Series A
(500k-1mEur)
● Europe & North America
● 65% SaaS investments
Search as a
Service
Translation as a
Service CMS as a Service
Alerts as a Service Helpdesk as a
Service Forms as a Service
@rodrigoMrz
Agenda
APIs from Investors’ POV
What do investors look for in APIs Startups:
● Great market
● Great product
● Great team
● Great business
As-seen-in VC: Examples and Trends
@rodrigoMrz
APIs from Investors’ POV
APIs as core
We APIs
APIs ecosystem
APIs as by-product APIs as strategy
+100
+bn
+100
Funds
Exits
Rev
@rodrigoMrz
APIs from Investors’ POV Marketing
Potentially low cost of
acquisition Because:
a) inbound: developers as proactive
customers
b) referrals: word of mouth works well Churn
Potentially high lock-in Because:
a) “don’t touch what works”
Conversion rate
Potentially high conversion Because:
a) Developers do their own research
b) APIs solve “tough” problems
c) Usually somebody else paying
Competition
Potential commoditization Long-term threat, because:
a) Developers building developer tools
b) Hard to build brand in back-end
Competitive advantage
Technically challenging Because:
a) Scalability issues
b) Good tech people are hard to find
(+ expensive)
@rodrigoMrz
What do Investors Look for in
API Startups*
● Great market
● Great product
● Great team
● Great business
Great Market
Great Products
Great Teams
Great Business
+ traction helps!
* As always @rodrigoMrz
Great Market
Big Market Urgent&Recurring need Competitive environment
@rodrigoMrz
Great Market (ii)
Financial Services
Business data
Proprietary data
Pro Translation
Translators
Marketplace
@rodrigoMrz
Great Product
Building block Technically complex
Unfair advantage
Maintenance reqd
Unique assets
Great Product (ii) It Took 14-Months To Build
Stripe's Infrastructure
@rodrigoMrz
Great Team
Deep knowledge
Technical skills Communication skills
Dev evangelism
Fundraising
@rodrigoMrz
Great Team (ii)
Deep knowledge
Technical skills
Communication skills
Dev evangelism
Fundraising
@rodrigoMrz
Great business
Increasing complexity in APIs business models
Right pricing
• Freemium
• Pay-per-use / Subscription
• Price tiers
Right go-to-market
• Enterprise
• Self-service
• Inside sales
@rodrigoMrz
As-seen-in VC: Examples & Trends Fragmentation of Stacks
API prototyping
Vertical Enterprise APIs
Data Aggregation
APIs’ Consumption
for Dummies
Programable web
@rodrigoMrz
Dev Building Blocks
Thanks
www.pointninecap.com + Some say we have a pretty cool newsletter! ;)
Follow us on Twitter @rodrigoMrz | @PointNineCap