Mashery Pulls $10M from Insiders for API Management


SOURCE: VentureWire
By Deborah Gage
(c) 2012 Dow Jones & Company, Inc.

More people are interacting with businesses through a myriad of incompatible mobile apps, and businesses need help managing that. San Francisco-based Mashery Inc . said it has raised another $10 million in funding from inside investors to help them do it.

The round was led by OpenView Venture Partners and other investors in Mashery's Series D round last year and takes the company's total funding to nearly $35 million. It was an up round, according to co-founder and Chief Executive Oren Michels , but valuation wasn't disclosed.

The number of Application Programming Interfaces, which are gateways through which different pieces of software interact, is exploding as more people use mobile devices, and Mashery helps businesses figure out how to use Mashery's technology to manage them.

With all the different languages, screen sizes and form factors on different mobile and portable devices, "the whole thing is an opportunity to truly delight a customer…or frustrate people," Mr. Michels said.

It's a complex task. Mashery customer Netflix, for instance, has described API management as "a journey." Netflix wants to boost the number of customers who stream movies or TV shows from its website. The company first tallied the number of apps its customers were using, but after discovering how many there were, it decided to manage the devices those apps were coming from instead, because there were far fewer devices to manage than there were apps.

Lately Netflix has been looking at the capabilities of HTML5, a language for presenting content on the Web, as a way to enhance its APIs and thus enhance Netflix users' experience when they're online, according to Mike Hart , Netflix's former director of engineering and social systems, who spoke in a video posted on Mashery's website.

Mashery went with OpenView again for this funding round because the firm, which led Mashery's $11 million Series D round last year, has helped Mashery figure out which customers to target with its technology through its OpenView Labs, the venture firm's consulting arm for expansion-stage companies, Mr. Michels said.

This was also a complex task. Mashery has grown in the last year in the number of developers it has attracted, the number of live apps built on its technology and the traffic to its platform, and claims 18 Fortune 500 customers. But big customers can be demanding, and a small company has to be careful to manage its growth.

OpenView helped Mashery figure out how to find the right people to talk to inside retailers, according to board member and OpenView Senior Managing Director Scott Maxwell , and explain to them how using Mashery to manage their APIs could help them boost business by generating new transactions.

Mashery had term sheets from other VCs, some with slightly better terms, but "not enough to justify going through the process of full-on due diligence and everything else," Mr. Michels said. Also, "the lawyers already knew each other. They'd seen the docs before."

The new money will be invested in sales, marketing, technology and operations, and Mr. Michels said he now has new VCs he can turn to if he chooses to raise money again. Also, since OpenView reinvested, he said he won't feel guilty calling on OpenView Labs for more help, even though Mashery employees have now moved out of the Boston lab and into their own offices.

Other investors in this funding round include Cisco Systems Inc ., which is also a customer and uses Mashery for its supply chain; Formative Ventures; First Round Capital ; and .406 Ventures.