Investors looking to invest in API

The investment thesis for API software startups is centered around the scalability and high growth potential of these businesses. APIs (Application Programming Interfaces) allow different software systems to communicate and exchange data, making them a crucial component of modern software infrastructure. This has created a demand for specialized companies that can provide robust and reliable API solutions.

There are several categories within the API software industry, including:

• Infrastructure APIs, which provide core services such as authentication and payment processing
• Data APIs, which provide access to specific data sets such as real estate or financial information
• Integration APIs, which allow different software systems to integrate with each other
• B2B APIs, which allow businesses to share data and collaborate more effectively.

Some of the biggest players in each of these categories include companies such as Twilio (Infrastructure APIs), Plaid (Data APIs), Zapier (Integration APIs), Segment, Algolia, and Clearbit (B2B APIs).

One of the main benefits of API software startups is their unit economics, which are often highly favorable compared to other software businesses. This is due to the recurring revenue model that most API businesses employ, where customers pay a monthly or yearly fee for access to the API. This provides a predictable and steady stream of revenue, making the business model attractive to investors.