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Saturday, July 5, 2014

Matrix Bets on Wireless - Steve Lisson, Austin, TX

BW Online | September 17, 2001 | Table: Big Returns at Matrix

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SEPTEMBER 17, 2001

FINANCE

Back to Main Story

Big Returns at Matrix

FUND YEAR SIZE RETURN*

MILLIONS

PARTNERS III 1990 $80 773%

PARTNERS IV 1995 125 1,997

PARTNERS V 1998 200 1,563

PARTNERS VI 2000 319 N/A

* Actual proceeds to investors from liquidated investments (stock distributions or cash from sales), as a percentage of

committed capital, as of Dec. 31, 2000

Data: InsiderVC.com

1 of 3 2/6/2008 7:54 PM

BW Online | September 17, 2001 | Table: Big Returns at Matrix

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3 of 3 2/6/2008 7:54 PM 2013

Steve Lisson, Austin, Stephen Lisson, Stephen N. Lisson, Austin, TX, Texas, Stephan Lisson, Stephan N. Lisson

Posted by Stephen Lisson at 4:05 PM

Labels: Austin, Stephan Lisson, Stephan N. Lisson, Stephen Lisson, Stephen N. Lisson, Steve Lisson, Texas, TX

BW Online | September 17, 2001 | Matrix Bets on Wireless

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SEPTEMBER 17, 2001

FINANCE

Matrix Bets on Wireless

In a weak economy, Managing Partner Paul Ferri's winning streak is on

the line

Since the great tech wreck of 2000, life for most venture

capitalists has been rough. They're making fewer

STORY TOOLS

investments, marking down the value of those they have,

Printer-Friendly Version

and facing headaches raising new cash. Not Paul J. Ferri,

however. In the past 12 months, the managing partner of

E-Mail This Story

Matrix Partners of Waltham, Mass., has invested $101

million in 13 companies, mostly wireless communications

startups. And in May, he raised $1 billion for his latest

fund--more than double what he raised in the 1990s.

Table: Big Returns at Matrix

Matrix is a magnet for new money because it was one of

the nation's most profitable VC firms through the 1990s,

FINANCE

says Steven Lisson, who tracks venture funds at his Web

Hedge-Fund Follies

site, InsiderVC.com. The best performer among Ferri's

three funds returned 20 times its investors' money from its Matrix Bets on Wireless

formation through Dec. 31, 2000, and his worst seven times

the original investment (table). Matrix sold many of its big winners near the top of the

market. For example, it paid 20 cents a share for optical networking company Sycamore

Networks Inc. in 1998 and sold last year at $107 a share, for a 53,400% gain. Just six

companies out of 60 that Matrix backed--including the only two dot-coms--were losers.

"What's unique about Matrix is that most top firms do have an occasional weak fund,"

Lisson says, "but Matrix does not."

GROUND RULES. The Italian-born Ferri sidestepped the tech meltdown by following

strong, even rigid, investing rules that he has developed over a 30-year career as a

venture capitalist. For starters, he steers clear of fanciful theories--such as the idea that

Webvan Group Inc., which filed for bankruptcy in July, would create a whole new

business model for grocery distribution. Instead, Ferri focuses on technology equipment

companies headed by top engineers able to build products that can produce revenues

within two years. Most are referred by successful entrepreneurs that Matrix already has

funded. Plus, Ferri insists that Matrix must always be the first-round--and lead--investor in

a company because it gives him more influence on strategy. Another rule: One of its 11

partners, many of them experienced engineers and executives, must be on the board.

Now, despite the extensive overcapacity that's wreaking havoc on telecom startups and

giants alike, Ferri is betting big on wireless technology. He doesn't consider the strategy

to be all that risky, as the wireless business is still growing fast--at a nearly 30% clip,

according to Merrill Lynch & Co. "All our startups are selling into markets where there is

still demand for new products," Ferri says.

All the same, Matrix's new investments are focused on one of the most volatile sectors of

the tech industry. But Ferri says he's much happier now than where he was in then

1980s. Back then, he diversified into tech, retail, and health care. The results were not

spectacular, and the experience left him focused almost exclusively on tech equipment

and software companies.

Winphoria Networks Inc. is typical of the companies currently being funded by Matrix.

The Tewksbury (Mass.) startup was co-founded by Shamim Naqvi, a former top Lucent

Technologies Inc. engineer. Next year, Naqvi says, Winphoria plans to release new

wireless switching equipment at half the price but four to five times the capacity of today's

switches--making it potentially a high-priority purchase by battered wireless carriers.

"We're not a sexy company, but it won't be hard for our customers to justify the cost of

buying our product," says Naqvi.

Ferri admits that near-term the weak economy could prevent many customers from

buying the products Winphoria and others are developing. So he is prepared to wait

SEPTEMBER

TODAY'S MOST

POPULAR STORIES

1.

Is John McCain

Good for Business?

2.

S&P's Buffett Stock

Screen

3.

Novell: Ready to Buy

4.

Exchange Mergers

Hit Roadblocks

5.

A Really Good

Collapsible Bike

Get Free RSS Feed >>

MARKET INFO

DJIA 12200.1 -65.03

S&P 500 1326.45 -10.19

Nasdaq 2278.75 -30.82

Portfolio Service Update

Stock Lookup

Enter name or ticker

1 of 3

2/6/2008 7:54 PM

BW Online | September 17, 2001 | Matrix Bets on Wireless http://www.businessweek.com/magazine/content/01_38/b3749094.htm

three or four years--instead of one or two--to earn a return on his investments. And he is

planning to invest more money in his companies--double or triple the $8 million to $10

million investments that he typically made over the past 10 years. "We know we'll never

have the returns we had in the past," says Ferri.

No doubt Ferri's winning streak will be sorely tested in the next few years. Not only is the

tech industry struggling, he has also got far more to invest than ever before. But Ferri's

disciplined approach may see him through.

Podcasts

Special Reports

BLOGS

Auto Beat

Bangalore Tigers

Blogspotting

Brand New Day

Byte of the Apple

Economics Unbound

Eye on Asia

Fine On Media

Green Biz

Hot Property

Investing Insights

Management IQ

NEXT: Innovation

NussbaumOnDesign

Tech Beat

Working Parents

TECHNOLOGY

J.D. Power Ratings

Product Reviews

Tech Stats

Wildstrom: Tech Maven

AUTOS

Home Page

Auto Reviews

Classic Cars

Car Care & Safety

Hybrids

INNOVATION

& DESIGN

Home Page

Architecture

Brand Equity

Auto Design

Game Room

SMALLBIZ

Smart Answers

Success Stories

Today's Tip

INVESTING

Investing: Europe

Annual Reports

BW 50

S&P Picks & Pans

Stock Screeners

Free S&P Stock Report

SCOREBOARDS

Hot Growth 100

Mutual Funds

Info Tech 100

S&P 500

B-SCHOOLS

Undergrad Programs

MBA Blogs

MBA Profiles

MBA Rankings

Who's Hiring Grads

By Geoffrey Smith in Boston

Get BusinessWeek directly on your desktop with our RSS feeds.

Add BusinessWeek news to your Web site with our headline feed.

Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or

video.

To subscribe online to BusinessWeek magazine, please click here.

Learn more, go to the BusinessWeekOnline home page

BW EXTRAS

2 of 3 2/6/2008 7:54 PM

BW Online | September 17, 2001 | Matrix Bets on Wireless

BW Digital

BW Mobile

BW Online Alerts

Dashboard Widgets

Podcasts

RSS Feeds

Reprints/ Permissions

Conferences

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Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.

Terms of Use | Privacy Policy

http://www.businessweek.com/magazine/content/01_38/b3749094.htm

Media Kit | Special Sections | MarketPlace | Knowledge Centers

3 of 3 2/6/2008 7:54 PM

Posted by Stephen Lisson at 3:44 PM

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Posted by Stephen Lisson at 11:32 AM

Labels: Austin, Stephan Lisson, Stephan N. Lisson, Stephen Lisson, Stephen N. Lisson, Steve Lisson, Texas, TX

Monday, February 11, 2013

BW Online | September 17, 2001 | Table: Big Returns at Matrix

Register/Subscribe

Home

http://www.businessweek.com/magazine/content/01_38/b3749095.htm

Register

Sign In

keyword or company

U.S. EDITION

Full Table of Contents

Cover Story

Up Front

Readers Report

Corrections &

Clarifications

Technology & You

Books

Economic Viewpoint

Economic Trends

Industry Insider

Business Outlook

News: Analysis &

Commentary

In Business This Week

Washington Outlook

International Business

International Outlook

Government

Management

Special Report

The Corporation

Finance

Science & Technology

Developments to Watch

Information Technology

BusinessWeek Investor

The Barker Portfolio

Inside Wall Street

Figures of the Week

Editorials

INTERNATIONAL

EDITIONS

International --Readers

Report

International --Asian

Business

International --European

Business

International --Finance

International --Int'l

Figures of the Week

International --Editorials

PREMIUM CONTENT

MBA Insider

BW MAGAZINE

Get Four Free Issues

Register

Subscribe

Customer Service

ONLINE FEATURES

Book Reviews

BW Video

Columnists

Interactive Gallery

Newsletters

Past Covers

Philanthropy

SEPTEMBER 17, 2001

FINANCE

Back to Main Story

Big Returns at Matrix

FUND YEAR SIZE RETURN*

MILLIONS

PARTNERS III 1990 $80 773%

PARTNERS IV 1995 125 1,997

PARTNERS V 1998 200 1,563

PARTNERS VI 2000 319 N/A

* Actual proceeds to investors from liquidated investments (stock distributions or cash from sales), as a percentage of

committed capital, as of Dec. 31, 2000

Data: InsiderVC.com

1 of 3 2/6/2008 7:54 PM

BW Online | September 17, 2001 | Table: Big Returns at Matrix

Podcasts

Special Reports

BLOGS

Auto Beat

Bangalore Tigers

Blogspotting

Brand New Day

Byte of the Apple

Economics Unbound

Eye on Asia

Fine On Media

Green Biz

Hot Property

Investing Insights

Management IQ

NEXT: Innovation

NussbaumOnDesign

Tech Beat

Working Parents

TECHNOLOGY

J.D. Power Ratings

Product Reviews

Tech Stats

Wildstrom: Tech Maven

AUTOS

Home Page

Auto Reviews

Classic Cars

Car Care & Safety

Hybrids

INNOVATION

& DESIGN

Home Page

Architecture

Brand Equity

Auto Design

Game Room

SMALLBIZ

Smart Answers

Success Stories

Today's Tip

INVESTING

Investing: Europe

Annual Reports

BW 50

S&P Picks & Pans

Stock Screeners

Free S&P Stock Report

SCOREBOARDS

Hot Growth 100

Mutual Funds

Info Tech 100

S&P 500

B-SCHOOLS

Undergrad Programs

MBA Blogs

MBA Profiles

MBA Rankings

Who's Hiring Grads

http://www.businessweek.com/magazine/content/01_38/b3749095.htm

BW EXTRAS

2 of 3 2/6/2008 7:54 PM

BW Online | September 17, 2001 | Table: Big Returns at Matrix

BW Digital

BW Mobile

BW Online Alerts

Dashboard Widgets

Podcasts

RSS Feeds

Reprints/ Permissions

Conferences

Research Services

Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.

Terms of Use | Privacy Policy

http://www.businessweek.com/magazine/content/01_38/b3749095.htm

Media Kit | Special Sections | MarketPlace | Knowledge Centers

3 of 3 2/6/2008 7:54 PM 2013

Steve Lisson, Austin, Stephen Lisson, Stephen N. Lisson, Austin, TX, Texas, Stephan Lisson, Stephan N. Lisson

Posted by Stephen Lisson at 4:05 PM

Labels: Austin, Stephan Lisson, Stephan N. Lisson, Stephen Lisson, Stephen N. Lisson, Steve Lisson, Texas, TX

BW Online | September 17, 2001 | Matrix Bets on Wireless

Register/Subscribe

Home

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Register

Sign In

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U.S. EDITION

Full Table of Contents

Cover Story

Up Front

Readers Report

Corrections &

Clarifications

Technology & You

Books

Economic Viewpoint

Economic Trends

Industry Insider

Business Outlook

News: Analysis &

Commentary

In Business This Week

Washington Outlook

International Business

International Outlook

Government

Management

Special Report

The Corporation

Finance

Science & Technology

Developments to Watch

Information Technology

BusinessWeek Investor

The Barker Portfolio

Inside Wall Street

Figures of the Week

Editorials

INTERNATIONAL

EDITIONS

International --Readers

Report

International --Asian

Business

International --European

Business

International --Finance

International --Int'l

Figures of the Week

International --Editorials

PREMIUM CONTENT

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BW MAGAZINE

Get Four Free Issues

Register

Subscribe

Customer Service

ONLINE FEATURES

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BW Video

Columnists

Interactive Gallery

Newsletters

Past Covers

Philanthropy

SEPTEMBER 17, 2001

FINANCE

Matrix Bets on Wireless

In a weak economy, Managing Partner Paul Ferri's winning streak is on

the line

Since the great tech wreck of 2000, life for most venture

capitalists has been rough. They're making fewer

STORY TOOLS

investments, marking down the value of those they have,

Printer-Friendly Version

and facing headaches raising new cash. Not Paul J. Ferri,

however. In the past 12 months, the managing partner of

E-Mail This Story

Matrix Partners of Waltham, Mass., has invested $101

million in 13 companies, mostly wireless communications

startups. And in May, he raised $1 billion for his latest

fund--more than double what he raised in the 1990s.

Table: Big Returns at Matrix

Matrix is a magnet for new money because it was one of

the nation's most profitable VC firms through the 1990s,

FINANCE

says Steven Lisson, who tracks venture funds at his Web

Hedge-Fund Follies

site, InsiderVC.com. The best performer among Ferri's

three funds returned 20 times its investors' money from its Matrix Bets on Wireless

formation through Dec. 31, 2000, and his worst seven times

the original investment (table). Matrix sold many of its big winners near the top of the

market. For example, it paid 20 cents a share for optical networking company Sycamore

Networks Inc. in 1998 and sold last year at $107 a share, for a 53,400% gain. Just six

companies out of 60 that Matrix backed--including the only two dot-coms--were losers.

"What's unique about Matrix is that most top firms do have an occasional weak fund,"

Lisson says, "but Matrix does not."

GROUND RULES. The Italian-born Ferri sidestepped the tech meltdown by following

strong, even rigid, investing rules that he has developed over a 30-year career as a

venture capitalist. For starters, he steers clear of fanciful theories--such as the idea that

Webvan Group Inc., which filed for bankruptcy in July, would create a whole new

business model for grocery distribution. Instead, Ferri focuses on technology equipment

companies headed by top engineers able to build products that can produce revenues

within two years. Most are referred by successful entrepreneurs that Matrix already has

funded. Plus, Ferri insists that Matrix must always be the first-round--and lead--investor in

a company because it gives him more influence on strategy. Another rule: One of its 11

partners, many of them experienced engineers and executives, must be on the board.

Now, despite the extensive overcapacity that's wreaking havoc on telecom startups and

giants alike, Ferri is betting big on wireless technology. He doesn't consider the strategy

to be all that risky, as the wireless business is still growing fast--at a nearly 30% clip,

according to Merrill Lynch & Co. "All our startups are selling into markets where there is

still demand for new products," Ferri says.

All the same, Matrix's new investments are focused on one of the most volatile sectors of

the tech industry. But Ferri says he's much happier now than where he was in then

1980s. Back then, he diversified into tech, retail, and health care. The results were not

spectacular, and the experience left him focused almost exclusively on tech equipment

and software companies.

Winphoria Networks Inc. is typical of the companies currently being funded by Matrix.

The Tewksbury (Mass.) startup was co-founded by Shamim Naqvi, a former top Lucent

Technologies Inc. engineer. Next year, Naqvi says, Winphoria plans to release new

wireless switching equipment at half the price but four to five times the capacity of today's

switches--making it potentially a high-priority purchase by battered wireless carriers.

"We're not a sexy company, but it won't be hard for our customers to justify the cost of

buying our product," says Naqvi.

Ferri admits that near-term the weak economy could prevent many customers from

buying the products Winphoria and others are developing. So he is prepared to wait

SEPTEMBER

TODAY'S MOST

POPULAR STORIES

1.

Is John McCain

Good for Business?

2.

S&P's Buffett Stock

Screen

3.

Novell: Ready to Buy

4.

Exchange Mergers

Hit Roadblocks

5.

A Really Good

Collapsible Bike

Get Free RSS Feed >>

MARKET INFO

DJIA 12200.1 -65.03

S&P 500 1326.45 -10.19

Nasdaq 2278.75 -30.82

Portfolio Service Update

Stock Lookup

Enter name or ticker

1 of 3

2/6/2008 7:54 PM

BW Online | September 17, 2001 | Matrix Bets on Wireless http://www.businessweek.com/magazine/content/01_38/b3749094.htm

three or four years--instead of one or two--to earn a return on his investments. And he is

planning to invest more money in his companies--double or triple the $8 million to $10

million investments that he typically made over the past 10 years. "We know we'll never

have the returns we had in the past," says Ferri.

No doubt Ferri's winning streak will be sorely tested in the next few years. Not only is the

tech industry struggling, he has also got far more to invest than ever before. But Ferri's

disciplined approach may see him through.

Podcasts

Special Reports

BLOGS

Auto Beat

Bangalore Tigers

Blogspotting

Brand New Day

Byte of the Apple

Economics Unbound

Eye on Asia

Fine On Media

Green Biz

Hot Property

Investing Insights

Management IQ

NEXT: Innovation

NussbaumOnDesign

Tech Beat

Working Parents

TECHNOLOGY

J.D. Power Ratings

Product Reviews

Tech Stats

Wildstrom: Tech Maven

AUTOS

Home Page

Auto Reviews

Classic Cars

Car Care & Safety

Hybrids

INNOVATION

& DESIGN

Home Page

Architecture

Brand Equity

Auto Design

Game Room

SMALLBIZ

Smart Answers

Success Stories

Today's Tip

INVESTING

Investing: Europe

Annual Reports

BW 50

S&P Picks & Pans

Stock Screeners

Free S&P Stock Report

SCOREBOARDS

Hot Growth 100

Mutual Funds

Info Tech 100

S&P 500

B-SCHOOLS

Undergrad Programs

MBA Blogs

MBA Profiles

MBA Rankings

Who's Hiring Grads

By Geoffrey Smith in Boston

Get BusinessWeek directly on your desktop with our RSS feeds.

Add BusinessWeek news to your Web site with our headline feed.

Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or

video.

To subscribe online to BusinessWeek magazine, please click here.

Learn more, go to the BusinessWeekOnline home page

BW EXTRAS

2 of 3 2/6/2008 7:54 PM

BW Online | September 17, 2001 | Matrix Bets on Wireless

BW Digital

BW Mobile

BW Online Alerts

Dashboard Widgets

Podcasts

RSS Feeds

Reprints/ Permissions

Conferences

Research Services

Copyright 2001 , by The McGraw-Hill Companies Inc. All rights reserved.

Terms of Use | Privacy Policy

http://www.businessweek.com/magazine/content/01_38/b3749094.htm

Media Kit | Special Sections | MarketPlace | Knowledge Centers

3 of 3 2/6/2008 7:54 PM

Posted by Stephen Lisson at 3:44 PM

Labels: Austin, Stephan Lisson, Stephan N. Lisson, Stephen Lisson, Stephen N. Lisson, Steve Lisson, Texas, TX

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