Cloudy, with just a hint of rain

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Cloud companies are on a tear, accounting for 38% of all tech-related IPOs over the 12-month period ended on Sept. 30, according to PricewaterhouseCoopers. All told, there were 40 tech IPOs over this period, of which 15 were cloud computing companies.

“This is a major wave that’s picked up a real head of steam,” said Gordon Ritter, a general partner at Emergence Capital. “It’s not likely to crash anytime soon.”

It’s not just the number of cloud companies going public; it’s their breathtaking performance that is so impressive. Here are some of the standouts from 2013:

Veeva Systems, an enterprise cloud provider for life sciences companies backed by Emergence Capital, saw a pop of 84% on its initial trading day. The company now boasts a market cap of about $4.7 billion on projected 2013 sales of about $200 million.

Marketo, a provider of cloud software to automate marketing processes funded by Battery Ventures, ended its first trading day with gains of 77.7 percent, and continues to climb.

RingCentral, a cloud communications company backed by Sequoia Capital, Khosla Ventures and DAG Ventures, rang up first-day gains of 40% and is now valued at more than $1 billion.

BenefitFocus, a cloud-based platform that helps employers manage their benefits plans, saw its stock price nearly double on the day of its IPO, and its valuation surge past $1 billion.

Cvent, a provider of event planning and management software funded by Insight Venture Partners and New Enterprise Associates, jumped 57% on its first day of trading and now has a market cap of about $1.36 billion.

Even more astonishing is that some of the biggest names in cloud computing, including Box, DropBox, Evernote and Twilio, have yet to go public, which could make 2014 a truly blockbuster year.

There are several reasons for the love for all things cloud.

“On the human side, consumers are starting to better understand the cloud because they are regularly using cloud services for everything from file sharing to contact sharing to email,” said Michael Skok, a partner at North Bridge Venture Partners and an active investor in the space. “The cloud has become mainstream and mission critical in people’s daily lives, so that is helping to drive public excitement.”

This story first appeared in Reuters Venture Capital Journal. Subscribers can read the entire original story here. To subscribe to VCJ, please email Greg.Winterton@ThomsonReuters.com.

Photo of clouds by Alastair Goldfisher.

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