At the beginning of 2022, GGV Capital launched their API-First Index. In March, they stated they were going “all-in on API companies because they will fundamentally simplify software development.” You’ll hear no arguments from us on that front!

We decided to check in on the API-First Index to see how it’s grown and what learnings we could pull out of it. For example, among other things, we were curious about which categories of APIs were most (and least) represented. The patterns within this group of API-first companies will likely indicate future movements for the API economy. So let’s get right into it!

What is API-First?

We recently compared the nuances between API-first and API-as-a-product. Per our definition, an API-first company doesn’t necessarily have to offer APIs to the general public. Rather, an API-first company acknowledges the value of APIs to accelerate its development. APIs can increase the customer experience by making a product more accessible.

While Twilio is clearly an API company — or an API-as-a-product — API-first companies include the likes of eBay, Netflix, and even Amazon. In other words, in API-first design, an API is often a means to an end. It creates a useful product rather than being the product itself.

Aside: Who is GGV Capital?

Founded in the year 2000, GGV Capital is headquartered in California and manages $9.2 billion in capital across 17 funds. On their website, they divide their investments into social/internet, enterprise tech, and smart tech, focusing on the seed-to-growth stage. A few of their notable investments include Airbnb, Bustle Digital Group, Slack, StockX, Poshmark, and Opendoor. Given their evident interest in APIs, we may expect to see them trying to add a few API-first companies to that list in the coming months.

In a TechCrunch article on the Index, GGV’s Chelcie Taylor explained that it “ranked the companies based upon their total funding raised, which we gathered from publicly available sources.” In other words, GGV isn’t currently privy to any information about these companies that’s otherwise unavailable, and it should be mentioned that they aren’t actively invested in all of them.

Of course, that may change in the future. In the meantime, the ringing endorsement of APIs from a well-established and global capital firm might spur investment in API-first companies from elsewhere.

Dissecting The GGV API-First Index

So, what types of businesses are on the API-First Index? Well, A quick glance at the index reveals just how diverse investment into API-first companies has been in recent years:

• AI & ML – 2
• Commerce – 2
• Communications – 9
• Content – 3
• Data – 3
• FinTech – 25
• Healthcare – 2
• HR – 1
• Insurtech – 2
• IT – 2
• Location – 3
• Logistics – 3
• Marketing – 1
• Security – 4

Almost half of the 50+ companies listed on the API-first Index operate in the FinTech sector. FinTech also represents 5 of the top 10 (and 4 of the top 5) companies ranked by the amount of funding raised. Stripe currently tops the board, with $2.235 billion invested to date.

In Q2 and Q3 of 2022 combined, 16 companies were added to the index. Although 3 Communications companies made their debut, 8 of those 16 companies operate in the FinTech space. Translation: it doesn’t seem like the dominance of FinTech in the world of API-first companies will be challenged any time soon.

Let’s look at the other end of the scale for a moment, ranking the companies by lowest investment. Of the “bottom” 10 — no sympathy or disrespect here, as they’ve all secured in excess of $50 million of investment — just one of those companies is related to FinTech.

This is anecdotal, and there could be a degree of coincidence involved, but it’s difficult not to come up with the following hypothesis: investors may be a little skeptical about pouring really big bucks into API-first companies unless they’re operating in the FinTech space.

The API-First Index or the API-as-a-Product Index?

Earlier in this article, we touched on the difference between API-first and API-as-a-Product. It’s worth mentioning that GGV’s API-First Index focuses almost entirely on API-as-a-Product companies. Likewise, the list of “API-led companies” and startups featured in the TechCrunch article linked above features almost exclusively API-as-a-Product companies.

We can reach a few possible conclusions from this. The first (and perhaps least exciting) is that, even within the tech space in 2022, the terms API-First and API-as-a-Product are often used interchangeably. Another, however, is that the API-first label is no longer enough to distinguish a product or service within the tech space. Most people wouldn’t necessarily label many companies that qualify and/or identify as API-First in that way, so a true API-First Index might just end up looking like an index of successful tech companies.

On the flipside, it could also be that the vast majority of ambitious API-First companies just so happen to be API-as-a-Product companies. This tricky distinction is one that it would be interesting to see GGV explore in the future.

The Future of the API Economy

When most people think of tech unicorns — companies with valuations in excess of $1 billion — they probably think of companies like Uber, Airbnb, or SpaceX. But, as of 2022, more than 1,200 unicorn startups are out there making waves in their respective spaces.

Among them? Companies like Stripe, Plaid, Rapyd, DriveWealth, and Checkr. If those companies sound familiar, it’s because they’re all featured in GGV’s API-First Index. And, when talking about unicorns and API companies, it’s always worth acknowledging the OG: Twilio.

All of the above offers further proof (as if we needed it!) that APIs are not only changing the face of tech, but are capable of competing with other forms of technological innovation at the highest level when it comes to securing investment.

In its first year, the API-First Index hasn’t necessarily told us anything we didn’t already know, but continues to serve as a signal boost for the value of APIs. And we’ll always welcome that!