A Silicon Valley VC says a group of tech companies are quietly blowing away expectations while the spotlight shines on splashy IPOs like Lyft and Pinterest

Jai Das, president and managing director of Sapphire Ventures, as seen in a photograph from 2019

The initial public offerings of consumer tech startups such as Uber, Pinterest, and Lyft are generating a lot of buzz lately.
Enterprise software startups don't spark the same kind of excitement, but they remain a central focus of venture-capital investing, said Jai Das, the president of Sapphire Ventures.
The market for enterprise software and services has grown larger than even Das and his colleagues expected.
He sees plenty of opportunity ahead for such companies.
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When it comes to tech startups going public, consumer-facing companies such as Lyft, Pinterest, and Uber are getting much of the attention these days, thanks to their multi-billion dollar valuations.

But Jai Das thinks there's still a lot of investor demand — and plenty of growth opportunities — for less well-known companies that offer software and tech services for enterprises. Such startups remain at the center of most venture capital investing and likely will remain the core of the tech initial public offering market, Das, the president and a managing director at venture capital firm Sapphire Ventures, told Business Insider in a recent interview.

"The bread and butter of IPOs are still the enterprise software companies that are going out at like a billion, 2 billion [dollars]," he said.

Eight years ago, Marc Andreessen, the cofounder of venture capital firm Andreessen Horowitz, declared that "software is eating the world." That remains true to this day, Das said.

Established corporations ranging from Nike to Capital One are being challenged by nimble, tech-savvy startups, he said. In order to stay competitive, such traditional companies have had to invest in new software and services as well as developers of their own.

"You just see the impact software has on everything we are doing in all business," Das said.

The market for enterprise software is bigger than Das expected

But even Das has been surprised at how much demand there has been for new enterprise software and services. Take MuleSoft, which offers a service that helps companies manage the bits of code they offer that developers use to build apps. The revenue MuleSoft is now generating is far beyond what Sapphire expected when the firm invested in the company, long before Salesforce acquired MuleSoft last year, he said.

"We used to say that these companies could not get huge," Das said. But it turns out, he continued, "the market for a lot of the enterprise [is] huge."

Another factor that makes enterprise software companies so attractive to investors is that their revenue is very predictable, he said. Most such companies offer their services on a subscription basis. By the time they go public, they generally can fairly accurately estimate the portion of customers they'll lose or gain in any quarter, allowing them to forecast their sales with a good deal of precision, he said.

Public company investors in particular seem to appreciate that reliability, Das said.

"They have a very nice model when they go [public], because they know how much ... bookings they have to do ... to meet the numbers," he said.

To be sure, not every enterprise software startup is destined to get big. In fact, Das expects most will eventually get snatched up by bigger, established firms in the sector.

Read this: This VC says a shakeout is coming to enterprise software because titans like Oracle and Salesforce have 'account control' that no startup can match

Even so, Das continues to see a healthy market for enterprise software companies. They may not generate as much buzz as the big consumer tech startups, but for investors like him, they're still pretty exciting.

"If you discount Lyft and uber, all of these ... and we kind of focus on the enterprise space ... we see a whole generation of new, big companies are being created right now," Das said.

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