Matrix Partners Staffs Up Out WestFebruary 05, 2009
February 5, 2009
by Russ Garland, WSJ Venture Capital Dispatch
Matrix Partners, one of Boston’s best-known venture firms, is looking to up its visibility in Silicon Valley.
In the last six months, the firm has added former PayPal exec Dana Stalder and consumer Internet entrepreneur Josh Hannah, doubling the number of general partners in its Sand Hill Road offices. It now has four partners in Menlo Park, Calif., versus six at its headquarters in the Boston suburb of Waltham, Mass. “I think we’re up to critical mass now,” said General Partner Andrew Verhalen, who runs the California office.
Matrix, whose roots date to 1977, was one of the first venture firms to have offices on both coasts, but in the late 1980s, as it prepared to raise its third fund under the Matrix flag, the firm decided to concentrate on early-stage information technology investing mainly in New England.
“We said it’s easier to compete in New England,” Matrix founder Paul Ferri said during a panel discussion at last year’s National Venture Capital Association annual meeting in Santa Clara, Calif. “There were very few people that were interested in doing start-ups. In my judgment they weren’t as good as the people out here. So we tried to put a team together in Boston that I thought could move to Sand Hill Road and compete with the very best people out here. That was the measure that we applied.”
It was the right move at the right time, Ferri said, and through the 90s, Matrix scored with several funds that achieved what he said were “industry leading returns.” The firm never abandoned California, but while it can expect to see most IT deals in the Boston area, in Silicon Valley “it’s been more kind of rifle shooting,” Verhalen said.
With the addition of Stalder and Hannah, Matrix sees itself becoming more active on the West Coast, especially in companies doing business on the Internet. Stalder said he’s upbeat about e-commerce and user-generated content plays that make money through lead generation as opposed to display ads. “There’s no question in my mind that this is the best time to be investing in early-stage Internet companies and software companies that we have seen in at least 10 years,” he said.