API technology startup Kong Inc. said today it has closed on a bumper $175 million late-stage round of funding, bringing its total amount raised to date to more than $346 million.

Today’s Series E round, led by Tiger Global and Balderton, brings Kong’s valuation to more than $2 billion. In addition to those backers, the round saw the participation of new investors that include the Ontario Teachers’ Pension Plan and 137 Ventures, plus existing investors Andreessen Horowitz, Index Ventures, CRV, Sapphire Ventures and Notable Capital.

Kong has created a suite of technologies for managing application programming interfaces and microservices and connecting the two natively across public clouds, Kubernetes environments, on-premises data centers and more.

APIs are the key to modern applications, including next-generation artificial intelligence apps. These days, they’re the preferred method used by developers for exposing data and services when building microservices-based applications in software containers that can run on any computing environment. According to Kong, APIs account for more than 80% of global internet traffic.

In simpler terms, APIs are what enable applications to communicate with other apps and services. For instance, APIs are what make it possible to book a flight using an app such as Skyscanner, and have that reservation automatically appear in a calendar application.

With Kong Konnect, Kong helps developers to simplify API management across environments with one-click deployment mechanisms. Having established itself as a leader in API management, Kong believes it will play a central role in the ongoing generative AI revolution, helping organizations to build these applications faster while providing centralized security, visibility and governance.

To do this, it has created a dedicated product for AI applications called the Kong AI Gateway, which is a cloud-native open-source gateway that makes it easier to deploy AI plugins and large language models in any application. With its security and governance controls, Kong AI Gateway enables companies to carefully control the flow of data to any AI model or application, and effectively manage consumption.

Due to its complexity, the growth of AI technology is going to be contingent on the proliferation of APIs – simply put, you need dozens of APIs to do AI properly, which explains why Kong and its backers believe it has such a bright future ahead of it.

Kong’s co-founder and Chief Technology Officer Marco Palladino spoke with John Furrier, executive analyst at theCUBE Research, during a CUBE Conversation in September, when he talked about how API management has become essential for scaling AI workloads. He explained that the vast amounts of data AI apps consume means the need for advanced systems to manage and optimize API traffic has never been greater.

“It is very important to actually understand what the AI traffic does,” Palladino said. “If we understand what is being requested through AI semantically, so we understand the meaning of the prompts, we can then understand how similar different prompts are with each other. Now, we can implement intelligent capabilities for accelerating and securing and routing, and more, of these AI traffic.”

Holger Mueller of Constellation Research Inc. said Kong’s ability to raise so much money underscores the need for companies that can help to bridge much-needed data to and from AI systems using APIs. “Kong’s capabilities are critical to power the next wave of generative AI, which will need to look into transaction data in real time to support better automation,” he said.

Over the years, Kong has accumulated a solid customer base of more than 700 enterprises globally, including well-known companies such as GSK plc., PayPal Holdings Inc., Moderna Inc. and the New York Stock Exchange, helping it to grow its annual recurring revenue to more than $100 million as of December 2023.

Kong said the funds from today’s round will help it to stay at the forefront of the API revolution, and it has plans to accelerate its global go-to-market expansion strategy, invest in product innovation and build out its engineering and customer experience teams.

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