What a two weeks it’s been. Something happened that has been simmering for a while. The API market exploded. Intel bought Mashery for more than $180 million and CA acquired Layer 7. 3Scale received a new $4.2 million round of funding from Javelin Ventures. Mulesoft acquired Programmable Web. And then Facebook jumped in and bought Parse.
The acquisitions and funding point to a maturing market that is reflected in the ubiquity of APIs across the application landscape. It’s not a new market by any means. The space is filled with companies that have leveraged the API build out that has happened over the past several years. Instead this is an inflection point. There are more than 30,000 APIs, according to Programmable Web, the leading API directory and blog. Javelin Ventures Managing Director Noah Doyle said to me in an interview that analysts see the API market growing five to ten times over the next five years.
With that scaling in number of APIs comes a virtuous circle for the developers that build compelling apps and APIs. The APIs extend the apps reach as they become part of distributed data network. As more people use the APIs so the app developer generates more data. As the data increases in scope, often the service will become an API.
Facebook needs new streams of data to keep rolling out new digital products. Back end as a service providers like Parse provide SDKs and APIs that give developers access to infrastructure for storing basic data types, locations and photos. How Facebook uses this data is a question mark. But regardless, Pare serves as a constant replenishing source, nourished by the apps on the Parse platform that use APIs. Facebook now will decide how to package and segment that data to push more relevant advertising to its 1 billion users.
APIs Are Like Glue
APIs will be the glue to the Internet, said Programmable Web Founder John Musser. Musser, like Doyle, sees a new generation of APIs emerging that are fueled by demand, triggered by mobile devices, which serve in many respects as the new client/servers. Apps are hosted on cloud services and distributed across mobile devices that read and write data, sending and receiving information, connecting via APIs.
In the first generation, Mashery and companies like Apigee pioneered the API management space. Twitter and other web companies emerged in the second generation. In the third wave, enterprise vendors, like Intel and CA, are recognizing this big movement and entering the market to connect hardware and software systems.
Now the API movement is headed below the application to the machine level, Doyle said. It’s at this level that we see the emergence of the Internet of Things. Here, everything become programmable, able to send and receive data, integrate it and trigger actions.
3Scale provides the management of the API so developers can build logic on top, Doyle said. The company helps developers manage APIs out of the box so they can simply add data sets or services without needing to hand stitch things together.
The API Economy
The surge of activity marks a symbolic point for the API Economy, a term ApigeeVice President of Strategy Sam Ramji helped coin. He said in an email that this past week may have doubled the size of the audience paying attention to APIs and API infrastructure. “If a company doesn’t have an API, and their CIO or CTO reads about the news, they will be asking themselves ‘why don’t we?’”
And it will be easier for them to build APIs with services popping up like Mashape and Webshell. Doyle spent three years at Google after the company acquired Keyhole, the startup he founded. At Google, Doyle helped develop Google Earth and worked on Google Maps.
It was the ease of use that made Google Maps accessible, Doyle said. Today, best practices are getting built-in so it is easy for the developer to build out sophisticated apps.
Complexity Is Inevitable
But it’s not all so simple. Complications await as development becomes ever more distributed across multiple APIs. It’s a hole MuleSoft sees it can help fill with its APIhub.
As I wrote last week, for MuleSoft, the Programmable Web deal provides a vehicle for it to offer what it calls a GitHub for APIs that will integrate its APIhub with Programmable Web’s API database and rich editorial focus on the correlating market space. For Programmable Web, it provides a stable home, a place where it can extend its API database to a community that can build out apps using the MuleSoft APIhub platform. It’s this integrated platform that the company expects to provide the guide and the community collaboration to make APIs easier to fit together.
Tasktop Technologies, an application lifecycle management (ALM) integrator, has launched an open-source effort called Software Lifecycle Integration (SLI) that would link the disparate tools in the software lifecycle management process. The new initiative is called M4 and is part of an open-source project under Eclipse-Mylyn.
SLI is what Tasktop CEO and co-founder Mik Kersten calls an underlying service that acts as a universal linked data message bus that allows for real-time synchronization between different tools so people can immediately discuss problems with the code as they surface. It’s these underlying integration platforms that will emerge as the API economy develops. Acquisitions and funding over these past two weeks signal the need to manage this complexity so it really is easier to build out apps that are as connected to our mobile devices as to the rest of the things in our lives.
We’ve been saying for a few months now that Barcelona is shaping up to be an emerging new technology hub in Europe. The ingredients are there: great universities, a young population, affordable living costs and literally a great location and climate. With seed funding on the doorstep in nearby hubs like Madrid and London, you can see a few things starting to happen. It’s why we held a meetup there only last year and during Mobile World Congress. Now there is further evidence that this hub can scale. Local companies 3scale and Marfeel have both secured decent venture rounds from international investors, recent news from joining Knok.
API company 3scale has secured $4.2 million in new funding from US-based Javelin Venture Partners and Costanoa Venture Capital. 3scale’s API management products have won it 200 customers globally and 85,000 end developers, and it counts Skype, Wine.com, FlightStats, PagesJaunes.fr (French YellowPages), and Yummly as users. Its competitors include Apigee, Layer 7, and Mashery which was recently bought by Intel for $180 million.
3scale was founded in 2007 and while its “HQ” is in Sunnyvale, Calif. it was built out of Barcelona and London. The founders are AI researchers Dr. Steven Willmott and Dr. Josep M. Pujol who took only only $800,000 backing before, mainly in an equity round led by Inveready Technology Investment Group in Barcelona, as an equity investor and local VC. This is therefore the second equity round in 3 Scale, making it a Series B round.
It’s important to note that Intel Capital invested in Indysis in Spain after Inveready’s backing. The lesson here is that in order for these type of investors to invest in European startups, it often helps to have had a local VC back them before.
Secondly Barcelona-based Marfeel has raised $2 million in a Series A funding led by Spains leading VC Nauta Capital, alongside Elaia Partners, BDMI, and existing investor Wayra, the Telefonica incubator.
Marfeel lets you turn any content web site into a Flipboard style experience on tablets, which is incredibly clever. Founded in October 2011 by former Adobe employee Xavi Beumala, the startup already has 4 million readers and over 100 million page views with its partners.
CA Technologies announced this morning that it has acquired API management company Layer 7. It is the second major acquisition of an API management company in the past week, signaling a consolidation of a market that larger companies see as vital for closing the gap between on-premise and online infrastructure and apps.
Last week, Intel acquired Mashery for $180 million. The acquisition price for Layer 7 was not disclosed but the Mashery price serves as a good guide for what CA was ready to pay. CA also announced it is buying Nolio, a company that provides continuous application delivery.
In a press release, CA said its solution combined with Layer 7 will help organizations to better manage and secure APIs and better deliver applications in the cloud across mobile and web environments.
CA said the acquisition will help:
- Securely enable strategic cloud, mobile and “Internet of Things” initiatives through API security and management
- Accelerate service delivery and increase profitability by externalizing and monetizing existing application assets that are securely offered via APIs
- Expand the network of API developers by offering a convenient API development platform that provides all the tools necessary to discover, publish and test APIs
- Govern API activity in order to enforce SLAs, improve operational performance and monetize big data transactions
- Secure the externalized API business through authentication, authorization, auditing and threat protection.
Layer 7 is considered one of the leaders in the API management space. It competes with Mashery and providers such as Apigee, which remains an independent company. The space also encompasses back-end-as-a-service (BaaS) providers such as Kinvey, Parse and Stackmob.
APIs have long been a staple for app developers. With the advent of REST-based APIs, the web and mobile app space boomed, providing the means to integrate multiple services in one application. With today’s enterprise, the need is to integrate online and on-premise architectures. It becomes important to build a layer around applications that can be connected with APIs to pull out relevant information that feeds into other systems.
That strategy seems to be a part of what makes Layer 7 appealing to CA.
The acquisition appears complenentary to the Nolio purchase, which “reinforces the enterprise evolution of DevOps – the confluence of application development and deployment via IT operations”, said 451 Research Senior Analyst Jay Lyman. He goes on to explain “how more enterprise and service-provider customers are implementing automation, continuous deployment and DevOps more broadly.”
That puts CA in a spot to provide a next generation of IT services for the emerging federated IT environment that bridges on-premise and the cloud.
We’re hearing from a source familiar with deliberations that Intel is buying Mashery for more than $180 million, in a move that shows how the chipmaker is slowly becoming both a hardware and a software company. ReadWrite had ballparked the acquisition price at 2-3x the company’s last reported valuation of $60 million.
ReadWrite, which first broke the news and confirmed the story, reported that Mashery’s 125 employees found out about the sale via an early morning email and that most will be given jobs in Intel’s Internet services division. Terms were not officially disclosed, but the deal was “not material to Intel’s financial results,” according to a statement.
API management company Mashery was founded in 2006 and raised about $35 million in funding prior to its acquisition. Mashery founder Oren Michels did not comment about the size of the deal when we inquired earlier today.
Mashery and Intel have been friends for awhile, having formed a partnership last November to develop the Intel Expressway API Manager. According to Programmable Web, the service is designed to solve the problems of ‘secure API enablement and API product management’ for Enterprises when they are looking for an API management solution.”
Intel has been showing signs that it is growing its investment in its software division. This latest move follows Project Rhino, which will optimize its own Hadoop distribution for its server chips. The move is in line with Intel’s strategy to become more of a security software provider, as symbolized most in the acquisition of McAfee Software for $7.7 billion in 2010.
The API management space has matured in the past few years. Apigee, Singly and Layer 7 all compete in the space. Apigee is the oldest one of the group and has recently diversified to offer analytics and API infrastructures for next-generation, software-defined data centers.