API gateway firm Kong has raised $175 million in a Series E funding round, led by Tiger Global and Balderton, which takes its valuation to $2 billion.
The funding will power global expansion efforts by the company, which last year passed $100 million in ARR – and also achieved profitability.
""Kong’s strategic expansion across Europe, Asia and emerging markets addresses the growing global demand for robust API solutions.
"Their commitment to delivering a secure, scalable and resilient API infrastructure platform is essential in today’s digital economy," said Rana Yared, GP at Balderton, who is now joining Kong's board.
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Kong has seen demand rise sharply, as customers seek API support for complex AI environments, as well as API management for the increasingly diverse microservices-based applications and architectures they run.
It provides an enterprise platform for API management, a service mesh, and ingress control as a cloud-based SaaS called “Konnect” with “the full stack of L4-L7 connectivity.” (A more bare-bones Apache 2.0-licensed Kong Gateway is also available for those looking to self-serve on-premises.)
The investment features new investor participation from Ontario Teachers’ Pension Plan (OTPP) and 137 Ventures, with support from the likes of Andreessen Horowitz, Index Ventures, among other investors.
Speaking to The Stack earlier this year, Kong co-founder Marco Palladino revealed how, with co-founder Augusto Marietti, he had taken the startup from his native Italy to the US, after struggling to raise money in Europe – and then within 15 days of arriving landed $100,000 in angel investment.
It now names over 700 enterprise customers globally, including GSK, PayPal and NYSE, among other blue chips.
Kong Series E: Grow harder, is the plan
As of early 2024, Kong had more than seven million instances of the gateway running globally, processing over 20 trillion requests monthly.
(As Palladino put it on a call with The Stack earlier in 2024: “Almost everything enterprises do is now powered by an API. Websites, mobile applications, generative AI: API's are the interface of the business.”)
The numbers bear this out: API calls appear to be by some margin the fastest growing form of traffic out there. Even back in 2018 one Akamai report found that they represented 83% of web traffic. (In 2022 Cloudflare put the figure at a more modest 54% but “growing twice as fast as traditional web traffic.”) Kong now puts it at approximately 80%.
The company says its suite of “free, open-source AI plugins” turns its latest Kong 3.7 Gateway into a “fully scalable, cloud-native AI gateway" and it aims to continue growing aggressively as organisations scale up their suite of AI applications. This kind of gateway is increasing demand as platform engineers seek a portal to handle security, visibility rate limiting and other controls between developer teams and the range of local and cloud-based LLMs they are making API calls to for AI applications.
Some organisations are, as The Stack recently flagged, also choosing to build their own such gateways here on OSS, but Kong says it “a lot of opportunities to help in-house teams” and claims a major performance edge – LLMs are not typically blisteringly fast and when layers of architecture are included, performance can lag; speed is king.
The company describes itself as the “fastest API gateway in the world” and flagged its “five consecutive years as a Leader in the Gartner Magic Quadrant” in an email to The Stack, saying “we win by… delivering the most scalable, secure, and developer-friendly platform available.”
With the funding the company will built out its GTM globally, as well as invest in further innovation: “We have a robust pipeline in the works, and we’ll be continuing to enhance Konnect, our unified API platform… to improve security, developer productivity, and scalability to meet the growing demands of AI-powered and API-first enterprises,” it said.
