A VC Explains Why Enterprise IPOs Have Been So Hot

It's apparent to anyone by now that startups serving enterprise customers have become the darlings of investors.

On Friday, two of them had very successful initial public offerings: Tableau Software's stock was initially priced at $31 a share, rose 60% that day, hit a high of $59 on Monday and was today still trading at over $50.

Marketo rose nearly 78% on its first day of trading from the opening price of $13 to over $23 and today was trading at ~$25.

This follows big hit IPOs last year from Splunk, Palo Alto Networks, and Workday, to name a few.

Why are investors so gung-ho on enterprise, when consumer stocks like Zynga and Groupon are struggling?

Asheem Chandna, a venture capitalist specializing in enterprise at Greylock Partners explains:

"It's because these markets are real. The IT market is a multi-trillion-dollar market," he told Emily Chang during an interview for Bloomberg West TV. "Enterprises spend real dollars" and have big IT budgets.

Plus, he says, this is only the beginning: "We're still very early in the move towards the cloud and towards mobile."

Those are two technologies that are radically altering how enterprises deliver tech to their employees.

Chandra isn't predicting the death of the current crop of big enterprise players, like Oracle, SAP, or Salesforce.com. Those companies will acquire plenty of these startups and keep on ticking.

But he does see the new players taking some customers away from them. He predicts at least a few of these young companies are destined to become billion-dollar companies on their own.

That's obviously what investors see, too.