Today Salt Security, a startup that helps companies protect APIs, announced that it has closed a $20 million Series A. The Palo Alto-based company secured the new funds from Tenaya Capital, bringing its total capital raised to around $30 million.
The Salt round caught TechCrunch's eye as it fits reasonably well into a growing trend of API-powered and focused startups raising capital in recent months. On the back of Plaid's epic exit, and the continued success of Twilio, APIs appear to be a lucrative way for startups to build attractive revenue tallies that entice both investors and acquirers alike.
Notably Salt Security offers its API security service -- the startup helps customers defend against API "attacks," and find API-related "vulnerabilities," per its website -- as a SaaS application; the company did tell TechCrunch that it can also "integrate via API with other solutions in a customer’s environment," for what it's worth. Regardless, as Salt is a startup focused on the API economy, we wanted to note its funding event.
To get a handle on how the company managed to raise during a purportedly difficult time to attract new capital, TechCrunch dug in a little bit. Read on for growth notes, and some details on whether more startups are using APIs to power their businesses.
The short answer regarding how Salt managed to secure capital is growth, as far as TechCrunch can surmise: According to the firm, Salt "almost doubled [its] revenue in the first half of 2020 from the end of 2019 despite COVID-19 in addition to retaining our existing customers." As the firm just raised a Series A, its 2019 end-of-year revenue tally likely wasn't huge, but the company's pace of topline expansion is precisely what private investors like to bet on.
Even better, Salt shared with TechCrunch that its gross margins have "significantly improved to over 90%" in response to a question regarding changes in the startup's gross margin profile over the last 18 months. Salt also cited sharp demand for its product from larger companies in its notes to this publication.
But it's smaller companies that we're more interested in, given our API startup focus. TechCrunch asked Salt if it is seeing API-powered business models becoming more popular among growing tech companies. Via email, the startup said that it has "seen an increase in the use of third party APIs and more companies are opening new APIs for partners to share data" and that APIs are "definitely a growing business model not only for startups but also for established companies looking to innovate and grow their business."
Good to know that we weren't out to lunch when we noted the trend.
Wrapping, while researching Salt for this post TechCrunch noticed that the company's website details an all-male leadership team. We raised the matter to the startup, which responded saying that "diversity and inclusion are core to [its] culture," and that it views the matter as "critical to a healthy, productive, creative and growing team." Salt also said that it has "plans to double in size by the end of year and this will create many opportunities for growing diversity within our executives and across our entire team." We'll take a peek at the same metric the next time we talk to the company.