It’s 3am. Do you know what your third-party API calls are doing?
Announcing our investment in Lunar.dev
Last week, Lunar.dev announced their seed round, led by our good friend Andy McLoughlin at Uncork Capital in San Francisco. Lunar.dev is an API consumption management platform that makes it vastly easier for engineering teams to manage the third-party API services they are consuming. We are particularly moved that this announcement is coming now in such a challenging time for Israel, where Lunar.dev is based.
Our journey with Lunar.dev began about 18 months ago, in the spring of 2022. The world was just emerging from Covid. There were signs of a tech slowdown brewing, but few entrepreneurs were aware of the implications. Over two meetings with Eyal and Roy, the co-founders of Lunar.dev, two critical things became clear: First, they had a big ambitious vision for what Lunar.dev could become. Second, they had their feet planted squarely on the ground regarding what it would take to build a significant business.
Let’s start with the second point: grounding in reality. When I met them, Eyal and Roy said that they had received term sheets for “five or six million dollars” at very high valuations for a slightly different concept, one focused primarily on API security. They knew, however, (as did I) that there were already several similar companies. They worried that the VC market was rushing to throw money at them, even as they knew they had not worked out a defensible plan or a unique value proposition. So they walked away from the money and went back to the drawing board. When I met them, Eyal and Roy asked for a small amount of money at a very reasonable valuation so that they could refine their plans and set out for a seed round later on. As I later joked with my partners, I wanted to back them just for that sort of discipline alone. Surely a team this grounded in reality would figure out how to build something valuable and real.
The first point — Lunar.dev’s big ambitious vision — is, of course, even more important to our investment thesis. Eyal and Roy understood that the world of software development is becoming ever more dependent on third-party APIs. So many of today’s mission-critical applications depend in turn on a large and growing set of third-party services, accessed via APIs, over which the authors of the application have little or no direct oversight or control. Consequently, many engineering teams have started to build their own home-grown API middleware infrastructure that hook into the API calls and responses and provide some insight or controls that can be used analytically or even programmatically. What’s the performance of API #1? How much are we spending on API #2? Which customers are triggering which third-party APIs and when? When API #3 is not meeting its SLA, can we automatically fail over to API #4? Can we monitor the content of API calls to API #5 and see what kind of data we are sending out? Could we drive better application performance if we cached responses from API #6 locally?
To meet these needs and many more, Lunar.dev is building the first API consumption platform, built on top of their proprietary Egress API proxy. It is, of course, open source and developer first. If you are consuming third-party APIs in your application, you can check out the GitHub, the documentation, or tinker with the sandbox (no installation required!). A hosted SaaS version of the tool is in the works and can be trialed by request. As a VC, one of the aspects of Lunar.dev that excites me the most is the rapid time to value (TTV) for new customers. Most customers experimenting with Lunar.dev can get results and value very quickly — sometimes in a matter of hours. Fast time to value, easy implementation, and large and growing unmet customer pain points is the formula for rapid revenue growth.
The key benefits that Lunar.dev delivers to customers are:
- Streamlined API Operations and R&D Efficiency: Lunar.dev’s customers frequently face challenges with their development teams being tied up in maintaining and updating API integrations. Lunar.dev has changed this process. It enables seamless control and optimization of API traffic, eliminating the need for manual code changes. What once took weeks of complex development can now be achieved with a simple click. This efficiency not only frees up R&D teams from routine maintenance tasks but also allows them to focus on more strategic initiatives. The scalability of their solution ensures that as the customer’s business grows, their API integrations evolve effortlessly.
- Cost-Effective API Management: As businesses expand, the cost of API usage often escalates. Lunar.dev addresses this directly by providing tools to actively monitor and optimize API calls. This functionality helps significantly reduce spend on third-party APIs.
- Enhanced Risk Mitigation and Compliance: Lunar.dev helps businesses ensure they are compliant with regulations in handling API integrations. The platform includes features like PII obfuscation and authorization token masking, ensuring that sensitive data and API keys remain secure. This is particularly crucial for companies that handle customer data through third-party APIs, as it provides a robust framework to enforce data protection policies, thereby mitigating risks associated with data breaches and non-compliance.
In recognizing the scale of this opportunity, Lunar.dev is not alone. Gartner’s top analysts have maintained for some time that the management of external API integrations is an unmet market need that might call the forming of a new category which they call “API Consumption Management.” Mark O’Neill, Gartner’s Chief of Research for Software Engineering, said recently: “The need for management of API consumption. This is still a largely unmet market need, though I’ve started to see startups targeting this requirement.”
We are incredibly proud to be Lunar.dev’s first VC backer, we are beyond thrilled that Uncork has decided to lead the company’s seed round, and we can’t wait to see what the coming years bring for the Lunar.dev team.