The Rise of the API Business in Y Combinator

After the recent successful IPO of Twilio, a company whose business is to provide APIs around telephony capabilities, there has been renewed interest in companies looking to understand APIs.  For Twilio, and other companies that provide APIs, they have made it possible to embed complex functionality into any sort of application extremely easily and with only a few lines of code.

This year’s Y Combinator ‘Demo Day’ showcased a graduating class of startup companies in the Y Combinator portfolio, and provided insight into some of the emerging technologies and businesses being pursued by today’s startups. Y Combinator is arguably the most prestigious startup accelerator program in Silicon Valley, having worked with leading companies like Dropbox, Airbnb, Stripe, and Instacart .  With that type of portfolio, the companies coming out of Y Combinator are worth paying attention to. This year, several of the companies in the class had APIs as a core component of their business, including one of our very own customers(!) that wants to transform the home improvement market with their APIs focused  on home utility costs—UtilityScore.

Here’s a quick rundown of some of the API-focused companies in this year’s Y Combinator batch:

1. UtilityScore: UtilityScore is poised to disrupt the home improvement market by providing personalized recommendations for home improvement projects based on ROI of those projects.  They do this by combining their vast and unique data set of national home information, local energy and water rates, and a proprietary algorithm to determine usage and costs at the individual home level. TIBCO was fortunate enough to work with the team at UtilityScore to quickly get an API strategy, developer portal, and API program in place so they could rapidly go to market and start integrating their valuable data into a number of different partner and customer applications. We’re expecting big things from this company whose passion around energy and water conservation simultaneously has direct economic benefits for consumers and also taps into a $1.5 billion market.

2. MessageBird: MessageBird, like Twilio, provides telephony and communications related APIs. They’re focused on doing it cheaper and faster than Twilio and are doing so profitably! Companies like MessageBird continue to enable powerful use cases for developers by tapping into the complex infrastructure of the global telcos.

3. Scale: Though computers are increasingly able to perform a number of repetitive tasks, humans are still quite effective at things like categorizing different types of data, doing phone surveys, or providing transcription services. Scale is a company that allows developers to instantly tap into a pool of human resources to perform such tasks.

4. Flutterwave: Payment processing is a hot area and with only a small fraction of global payments currently happening online, there is a massive opportunity in the future for companies that simplify online payments as the world becomes increasingly digital. Flutterwave is focused on the fragmented payments system  in Africa, a market where mobile payments already total over $360 billion a year.

5. Fellow: Another company focused on leveraging APIs in the world of finance is Fellow. Fellow provides an API to allow investors to access credit application flows, apply their own credit scoring criteria, to place offers instantly to borrows who are seeking working capital. This allows the creation of a more dynamic marketplace for borrowers and investors where investors can seek out opportunities that align with their investment or risk profiles in an automated fashion.

6. YesGraph: Modern product development focused on consumer applications often relies on having a trusted group of friends try your app out. To determine the right group of people and manage that process is still quite cumbersome which is a problem that YesGraph attempts to solve. Built by a CEO who used to run Growth at Dropbox, they are leveraging machine learning and social graphs to increase the efficiency and effectiveness of referral programs.

These companies are all tapping into the growing realization there is tremendous value in being able to integrate data and services into other applications and unlock it from your own app or UI. This is the power of APIs that we often preach to our customers. Congratulations to all companies in this year’s Y Combinator batch! All of you are tackling interesting and difficult challenges in a number of different areas and we’re excited to follow your progress in the months and years ahead!

To check out TIBCO’s API platform, Mashery, click here.