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/

1. What do Investors
Look for in API
Startups?
@rodrigoMrz
API days Mediterranea


2. 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

3. 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

4. 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

5. 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

6. 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

7. Great Market
Big Market Urgent&Recurring need Competitive environment
@rodrigoMrz

8. Great Market (ii)
Financial Services
Business data
Proprietary data
Pro Translation
Translators
Marketplace
@rodrigoMrz

9. Great Product
Building block
Technically complex
Unfair advantage
Maintenance reqd
Unique assets

10. Great Product (ii)
It Took 14-Months To Build
Stripe's Infrastructure
@rodrigoMrz

11. Great Team
Deep knowledge
Technical skills Communication skills
Dev evangelism
Fundraising
@rodrigoMrz

12. Great Team (ii)
Deep knowledge
Technical skills
Communication skills
Dev evangelism
Fundraising
@rodrigoMrz

13. 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

14. 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

15. Thanks
www.pointninecap.com
+ Some say we have a pretty cool newsletter! ;)
Follow us on Twitter
@rodrigoMrz | @PointNineCap
rodrigo@pointninecap.com