Matrix Bets on Wireless

Since the great tech wreck of 2000, life for most venture capitalists has been rough. They're making fewer investments, marking down the value of those they have, and facing headaches raising new cash. Not Paul J. Ferri, however. In the past 12 months, the managing partner of 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.

Matrix is a magnet for new money because it was one of the nation's most profitable VC firms through the 1990s, says Steven Lisson, who tracks venture funds at his Web site, InsiderVC.com. The best performer among Ferri's three funds returned 20 times its investors' money from its 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."