What Makes a Startup Idea 'VC Backable'?
What exactly makes a startup idea attractive to venture capitalists? Understanding this can be the key to unlocking the doors to VC funding.
There are several approaches you can take when creating an API business. You can sell the raw data you deliver through an API, provide data insights, or use the API as a data processor.
Here are some API startup ideas:
Raw data ideas
Data insight ideas
Data processing ideas
Fastest Way To Build An API
Low-code technology is currently the fastest way to build APIs (as well as entire apps). All you have to do is define your data model by creating database tables through a graphical interface, and your API is ready.
All the most important API endpoints are created for you automatically. This (quite literally) means your API can be ready in a couple of minutes from now.
After your API is live, you need a way to put your product on the market. And this article will cover ways you can monetize your API business.
Let's start with the main question: why would anyone buy and use someone else's API? Because doing it on their own would:
And remember, developer time is very expensive, and businesses will look for a way to do things quickly and efficiently. They would rather pay a small fee to use the existing API than reinvent the wheel. And if your API is useful, reliable, and easy to implement - you're on the right track.
Besides, the world today is so advanced due to specialization. Can you imagine internet commerce if every website that sells something had to implement its own payment processor? If everyone had to invent Stripe over and over again?
Nothing would ever get done. And that is why the API market is continuing to grow. Because the best way to build anything today is to focus on your core business and outsource all other non-essential parts:
In the case of the API business model, you are essentially renting your API. You are either selling or processing the data through that API. And you are helping other businesses focus on their core business. If you want to learn specifics, the API monetization strategy article explains different monetization options in greater detail.
An API business provides one of the rare situations where you can go from an idea to a running business in less than a day. To start an API business, you need three things:
As mentioned before, the easiest and fastest way to build your API is by using low-code technology. Just create database tables through UI, and the API endpoints are automatically generated. Done.
Having your own data is great, but in case you don't, there are alternatives we will discuss. So this should not stop you from creating your API business.
Lastly, you need an easy way to handle payments and monitor API usage. For that, using an API marketplace is the simplest option. And we'll go through each of these necessary components of your API business.
THE BEST THING ABOUT API BUSINESS
If you manage to get this business off the ground, it's hard to imagine it can fail afterward. Just think about it…
If your API is being used by many different apps, it is unlikely they will all fail. This means they will continue to be your users and paying customers as long as they exist. And it's hard to fail in business if you have a constant source of revenue.
The API you've created becomes the backbone upon which other businesses are built.
The most challenging part of an entire process is building an API. Low-code technology is definitely a way to do it most efficiently because you can create APIs:
If you're wondering how that is even possible, check out a more detailed article on low-code vs. programming.
On the other hand, this tool allows you to reduce development time on any project you're working on. Making developers 3-5X more effective.
If you already have any kind of business, an app, or just a website, you already have a lot of data that others might find helpful.
The data you might have access to is not limited only to your business. Your hobbies might also be an excellent source of data (sports, gaming, stamp collecting, etc.).
In case you really don't have any data, we encourage you to read an article on how to monetize open data sets that are publicly available. Data is everywhere today more than ever, and not having data should not be a blocker for building your API business.
The biggest problem (and opportunity) with open data is the fact that it is free but scattered across different spreadsheets and data files. If someone were to clean up, aggregate, and expose this data through an API, it could be useful to others.
Providing data in its raw form is not the only way to monetize your API. Maybe you have an algorithm that can process the data in a unique kind of way.
For example, you invented a new image filter that people can use in their apps. They just upload a raw image, and you return a processed one. The possibilities here are truly endless.
After you've built your API and know what data/service you're going to provide, it's time to offer this product to the world. All you need is a place that allows you to easily connect to your API and set your pricing options.
Several options exist, but RapidAPI is the biggest marketplace and probably the safest bet for your first API business.
It lets you set up everything through your browser and launch your brand-new API business in minutes. It will handle payments, you can set up different pricing models, and people can find you through this platform.
In essence, with this, you have all the tech problems solved when it comes to your API business. You can now just focus on promotion and getting new users.
Here is the list of the most successful businesses that used APIs as their key to growth. This list doesn't include the latest "hot" startups because a lot of them come and go.
Besides, there is also much more to learn from API startups that stood the test of time. How they started, scaled, and became household names.
Stripe is a prime example of doing everything possible to make it easy for developers. Before it was created, enabling payments was a painstakingly difficult process every developer had to go through.
This also meant it took a lot of time. And someone had to pay for it. So the entire project ended up costing more, and no one was really happy about it:
When Stripe came along, it managed to solve all these three issues simultaneously. And this is something to be strived for in your API business. Make yourself convenient, cost-effective, and reliable.
This is one of the oldest API examples because it goes back to the year 2000. And the genius thing they did was to enable developers to embed the listings into their website.
This means the actual product was listed on eBay, but you could show it on your website. And eBay was just used to handle payments etc.
Maybe today, that doesn't seem so impressive, but remember, that was back in 2000 and proved to be a complete success.
This one is pretty much unavoidable for any developer who needs to send an email or SMS. And this is how you know you're on the right track with your own API business - when you become a necessity.
Sending emails is not really complex, either. The developers can send an email themselves for free, using just a couple lines of code.
However, they are quickly hitting a scaling issue and have to reinvent the wheel again. So it's much simpler and far more reliable to just use Twilio, which is why it's worth billions.
Just like in the case of Twillio, building a dummy API on your local computer is easy by using a few lines of Node.js. However, that's where the simplicity ends.
When you want to build more endpoints, things get more complex. Need to store data? - Now, you need to set up and run the database.
Then you need to add endpoints for creating and updating data. But you also need to verify who edits what, so you need authentication and authorization middleware.
After you're done with that, you need to deploy it somewhere. For example, on a simple server. But what if you get more users? How to scale it further?
In case you didn't notice, most of the things described above have nothing to do with your core business.
A bunch of overhead you have to do, and you haven't even started building the heart of your API. And this heart is either the actual, useful data and/or processing you intend to provide through the API. Essentially, the main reason someone would decide to be your user in the first place.
All this trouble you have to go through using traditional programming methods can be avoided using low-code technology.
Imagine only focusing on the business logic of your app and letting low-code handle all the rest. Just define a business model, and the database is set up, as well as API endpoints.
Not to mention scaling is included as well. But you only pay for what you use. This means you're ready to go viral at any point. On the other hand, you don't pay anything before you have more users and data.
And even though you have all these benefits and development shortcuts, your project is still completely customizable. This gives you all the control you would normally have in a project built with traditional programming. But the difference is your productivity goes up by 3-5X.
The API business can either provide the information or process the user's input data. Both approaches can result in a valuable API. And the last step is publishing your API on the marketplace, where you can start charging for the usage of your API.