Marc Andreessen, legendary entrepreneur and now venture capitalist at the firm he co-founded, Andreessen Horowitz, famously opined a few years ago in the Wall Street Journal that software is eating the world. It was an emotive title for an OpEd but essentially the point Andreessen made was that at every turn organizations are using software to deliver services – from Netflix disrupting Blockbuster to Google’s self-driving cars, software is fundamentally changing the way we live.
But as I wrote in a recent whitepaper (disclosure, the whitepaper was a paid consulting job), software may be eating the world but APIs are giving it teeth. APIs (or Application Programming Interfaces) are the glue that connects different applications, connected devices and data sources generally. None of the disruption that Andreesen wrote about could have occurred without APIs.
So there exists a big opportunity for vendors to help organizations get control of their API program – to work out how APIs fit into what they do, to manage the creation and control of individual APIs and to gain some insights from all that data traversing said APIs. One of the better known vendors in the space is Apigee, a company I’ve covered many times in the best, most recently about their new big data analytics offering.
While Apigee was originally a pure play API management vendor, it now articulates what it does as delivering API management and big data offerings. What’s in a name huh? Either way, this new focus seems to have gotten the attention of investors, since Apigee is today announcing a new $60M funding round
Alongside all the existing Apigee investors, Pine River Capital Management and Wellington Management Company came on board with this round which takes the company’s total funding to a heady $171M. For anyone outside the space this could seem like an insane amount of cash (and, truth be told, it kind of is) but if Andreessen’s prophecies are to eventuate, and the entire internet of things comes to bear, the glue tying all those myriad of inputs together becomes an incredibly important part of the puzzle. API management might sound kind of boring, but it’s as critical to the success of the new world in the same way that electricity lines and steam plants where during the industrial revolution.
More broadly, Apigee recent forays beyond simply API management are interesting, especially in light of a post I wrote a few months ago that looked at the convergence that I’m seeing across the API management, application integration and Single Sign-On spaces. This $60M of funding isn’t just going to a company that provides glue – glue undoubtedly has value, but it’s gaining insights from being that glue that really starts to get exciting. These investors see Apigee as a vendor that can unlock immense related value for its customers, and in doing so deliver a massive result for its investors. I put this view to CEO Chet Kapoor who largely agreed but did say that he sees a broader trend of:
…two technologies coming together – predictive analytics and APIs. Recent developments have been a continuation of our journey to date. These solutions belong together, the question is how long other vendors take to bring them together…
Clearly there are some large traditional vendors who don’t, as yet, have a compelling answer to the API management/big data insights space. Whether Apigee’s mid term prospects are an IPO, or a trade sale directly, there are some well cashed up legacy vendors who would be prime suspects to acquire them – and the sort of value this platform brings justifies the kind of multiple the Apigee investors will be expecting.