VC candidates win some, lose some

Venture capital is a lot like political campaigning. It’s all about making risky bets on big efforts that could fail miserably. That similarity might explain why so many VCs find themselves running for office.

This year, several former venture capitalists ran for state and federal office, ending Election Day with a couple of big wins and two predicted losses. The two winners were formerly with Columbia Capital and PA Early Stage Partners. The two losers were once partners at Battery Ventures and Union Atlantic.

The highest profile contest was Virginia Democrat Mark Warner’s run for the U.S. Senate. The former Virginia governor rode to victory with 64% of the vote, easily beating his opponent, Republican Jim Gilmore, for the open seat.

Warner served as governor of Virginia from 2002 until January 2006. Before that, he co-founded the company that became Nextel, along with Columbia Capital, a technology-focused venture capital fund based in Northern Virginia. The firm, which no longer counts Warner among its partners, has about $2 billion under management, including a $560 million fourth fund that closed in 2005.

These days, judging by his campaign literature, Warner maintains a strong interest in technology and in cleantech, in particular. He says he favors increasing investment in renewable energy and other technologies that eliminate dependence on foreign oil.

Another venture industry veteran, Democrat Rob McCord of suburban Philadelphia, won the race for Pennsylvania State Treasurer on Tuesday. He defeated his Republican opponent, bond lawyer Tom Ellis, with 56% of the vote.

It seems that McCord’s experience raising capital from limited partners came in handy. McCord raised more than $5 million in the contest, giving him a 15 to 1 fund-raising edge over his opponent, according to the Associated Press.

McCord, co-founded and was managing director of PA Early Stage Partners (now called Novitas Capital), a Wayne, Penn.-based firm that invests in early stage technology and life science companies and manages about $237 million across three venture funds. Over the years, he has sat on such portfolio company boards as BPL Global, a provider of broadband-over-power-line technology, CerionX, a developer of plasma cleaning technology, and Investor Broadcast Network, a defunct financial news broadcaster.

McCord also incorporated a private equity strategy in his platform. On his campaign site, he promises to “advocate increased investment in non-correlated alternative assets,” defined as investments that have reduced near-term liquidity, but have higher returns and low correlation to stock and bond markets.

McCord claims this would help protect pensioners and taxpayers from volatility while increasing returns. It could also be good news for capital-seeking funds, as the Treasury Department invests more than $12 billion of Pennsylvania assets each year.

Despite the success of Warner and McCord, other former VCs were unable to achieve their political aspirations.

In Florida, U.S. Rep. Tim Mahoney, a Democrat, lost his bid for re-election to Republican attorney Tom Rooney. Mahoney won in 2006 on a platform emphasizing family values. At the time, he replaced Mark Foley, a Republican who resigned amid revelations that he sent lurid Internet messages to teenage male pages working on Capitol Hill. Mahoney’s re-election campaign took a hit, however, after the married man acknowledged multiple affairs.

Mahoney co-founded venture firm Union Atlantic in 1995 and led the purchase of vFinance.com, a matchmaking website for venture capitalists and entrepreneurs. The company currently offers investment banking and brokerage to later stage private firms, public companies and high net worth investors.

In Oregon, Allen Alley, a former Battery Ventures general partner, lost his bid to become Oregon State Treasurer. Allen co-founded Tualatin, Ore.-based Pixelworks, a fabless semiconductor company in 1997. He stepped down as CEO in 2006 and currently serves as chairman of the publicly traded company.

The Republican Allen lost to Democratic opponent Ben Westlund, a state legislator and former Republican who once ran as an independent for state governor.