Jason Lemkin

There’s no shortage of talk lately about frothy private company valuations, particularly when it comes to enterprise companies. Slack Technologies, the company behind the increasingly popular enterprise messaging platform, is the current poster child. Less than six months ago, Slack raised $120 million at a billion-dollar-plus valuation that many found stunning. Now, Bloomberg says it’s talking with investors about a round that would value it at more than $2 billion.

Very notably, Slack is growing at a torrid pace. As of mid February, it reportedly had 500,000 users, a number that had grown by 35 percent in just the first six weeks of this year. In fact, Jason Lemkin, a managing director at the early-stage, enterprise investment firm Storm Ventures, seems to think Slack is probably worth every penny at a $2 billion-plus valuation.

“No one is dumb in Silicon Valley,” he argues. “Early-stage investors are rolling the dice on hypergrowth and betting companies like Slack will be decacorns” worth more than $10 billion one day. “These crazy valuations, generally in [business-to-business companies], are associated with crazy growth.”

Lemkin notes, for example, that Slack is growing faster than the enterprise social network Yammer — and that Yammer grew faster than the online file sharing company Box. Both are success stories. Yammer, founded in 2008, sold to Microsoft for $1.2 billion in 2012. Box, founded in 2005, went public in January and is currently valued at nearly $2 billion.

But in both cases, their rates of adoption can’t touch what newer startups are seeing, says Lemkin. “[Today’s crop of leading enterprise startups are] growing their month-over-month revenue by mid-teen percentages. And after they hit a million dollars in revenue, that’s a lot of compounding.”

A variety of factors explain such accelerated growth, says Lemkin, including that the adoption of new business-to-business technologies often trails business-to-consumer adoption by three to five years. “That means lot of verticals are just getting ‘webified’ today, including doctors’ offices, e-discovery for regular people,” along with lots of other small and mid-size companies that are realizing what they can gain from the power and low-maintenance needs of hosted systems.

Lemkin also points to the growing piece of CIOs’ budgets that are being spent on SaaS products rather than traditional on-premises technology. Instead of buying their own servers and storage systems, companies are now buying both as a service — along with enterprise analytics, security, and more.

“You only need a few more percent of that roughly trillion dollars in enterprise budgets to create, say, 40 more Workdays,” says Lemkin, referring to the cloud-based HR and finance technology company that went public in 2012 and is now valued at more than $16 billion.

It’s not an outrageous estimate. Global SaaS software revenue is reportedly expected to reach $106 billion by next year, an increase of 21 percent of projected spending levels this year.

Indeed, while industry observers fret over soaring valuations, Lemkin says it’s those enterprise startups with monthly revenue growth in the single digits that should be doing some hand-wringing. While “you’d have gotten funded in days a couple of years ago, today, no one is going to take a meeting with you.”

Slack is “sort of [the standard that] everyone wants now,” he says.