Call it the Instagram Effect: Silicon Valley startups are seeing their valuations shoot up in the wake of the social photo-sharing site’s $1 billion acquisition by Facebook. So when cloud storage company Box (neé Box.net) raised $125 million this week, officially pushing it above the billion-dollar mark. But with cloud storage increasingly commoditized in the space, there’s a hanging question over whether this VC exuberance is irrational and Box is overfunded.

The argument against Box’s valuation goes something like this: If you don’t already know, Box specializes in the kind of sync-once-retrieve-anywhere super-simple file storage and sharing that was largely popularized by Dropbox. Except that the model has proven so popular with customers, and so simple to implement, that not only has just about every other vendor and service provider out there launched their own version – Microsoft and Apple have, to varying degrees, built the feature into the new version of their respective operating systems in the form of Microsoft SkyDrive and Apple iCloud.

Given the hugely saturated state of the sync-and-store market, skeptics don’t really see Box as being able to meaningfully differentiate to the degree that these investors are expecting. And with no IPO on the horizon, there’s no exit strategy that’s immediately apparent.

But a deeper read shows that Box is playing a subtler game. This time last year, controversial 27-year-old Box CEO Aaron Levie gave an interview to Business Insider where he discussed how he wants his company to focus on the enterprise space.

“A jack of all trades is a master of none[…]If you go to the average company in America, that’s not what they’ve implemented. They’ve implemented Salesforce as their CRM, Google Apps for email—a large number of them, in the millions—they’ll be thinking of Workday or NetSuite for their ERP. Each of those companies is or will become a multibillion-dollar company just focused on that best-of-breed aspect of what they’re trying to solve,” said Levie.

And Box’s strategy to date has seemingly meshed with these statements. Box has reported that in 2011, its enterprise revenues tripled year-over-year, and while as a private company it doesn’t have to report revenue, the continued and quick-paced successful rounds of funding indicate that it probably won’t slow down any time soon.

Perhaps more importantly, though, Box has also been building out its developer play. The Box OneCloud ecosystem consists of an app store for a pre-vetted selection of iOS (and recently Android) mobile tools designed to integrate with Box, putting all a user’s data in one place. As application interoperability and API support become key value-drivers in the enterprise application space, Box is building a safe, walled playground for developers to make sure everything works with everything else.

Box is not to be underestimated, says Rishidot Research Principal Analyst and cloud thought leader Krishnan Subramanian, and that “Box is not a feature if [Microsoft] SharePoint is not a feature.”

Content management is increasingly important to the modern enterprise, and Box’s strong smartphone support and existing user base means that it has a hard-to-beat hook into the rising consumerization and BYOD trends in the workplace. To wit, Subramanian says:

The fact that they play well in the interface of enterprise IT and consumer IT (consumerization of the enterprise) makes them an interesting player and their OneCloud platform goes on to highlight how they fit in this theme. However, they lack severely on the social front and it will be interesting to see how they close this gap in the coming year.

Of course, Subramanian does acknowledge that this valuation may be a bit on the high side, but he says that a competitive company deserves a competitive valuation. But, as he notes, social is a weakness for Box at the moment, and if it’s going to differentiate anywhere, it should probably be there.

All of this said, Box is using the VC money specifically to avoid having to have an IPO, and it’s playing its cards very close to the chest here, as in all things. But Box and Levie want no less than to topple Microsoft, Oracle and the legacy players, and I have a hunch that there are big things in store.