Scott Murphy, a venture capitalist running for Congress in New York, on Wednesday got some much-needed support from one of his startups.
Support from Synacor, a Buffalo, New York-based company, comes on the heels of a barrage of ads from Mr. Murphy’s opponent linking bonuses paid to Synacor’s CEO to bonuses paid to AIG executives.
Mr. Murphy, the managing director of Advantage Capital Partners, is in the home stretch of a heated and high-profile race to represent New York’s 20th congressional district.
Mr. Murphy is the Democrat running against Republican Jim Tedisco to fill the vacancy left after New York’s governor appointed Kirsten Gillibrand to serve the remainder of Hillary Clinton’s U.S. Senate term.
The race for the traditionally Republican seat, which was taken by the Democrats when Ms. Gillibrand beat a Republican in 2006, is now practically a dead heat just six days from the election.
Mr. Tedisco’s campaign launched a series of ads that tie a bonus paid to Synacor’s CEO in 2007 to bonuses paid to banking and insurance executives by companies such as AIG that received bailout money.
Calling Mr. Murphy a “venture capitalist Wall Street insider” the Tedisco ads take advantage of a wave of populist disgust over what many see as excessive Wall Street bonuses at a time of economic distress.
“Scott Murphy acted in the same irresponsible manner as AIG did when he gave out bonuses to executives at a company that took a half million dollars in tax breaks,” said Adam Kramer, a spokesman for the Tedisco campaign.
“He gave six-figure bonuses to Synacor CEO Ron Frankel despite the fact that the company lost money. And Frankel recently gave $2,400 to Murphy’s campaign,” Mr. Kramer said. (VCs Pour Money Into Democrats)
The Tedisco campaign, which obtained its data from Synacor’s IPO application, which was recently withdrawn because of the current economic climate, links tax breaks to bailouts.
On Wednesday a source at Synacor who requested anonymity blasted the Tedisco campaign, accusing it of knowingly building a phony case against Mr. Murphy, who is hardly a “Wall Street insider.”
“One of the main purposes of an investor making an investment in a startup is to reward growth. We grew from $3 million a year in revenue, to $14 million, to $26 million, to $52.5 million,” the source said.
The company, which markets white label Internet portals and related services, was rewarded for its growth by its board of directors, which included Mr. Murphy, according to the source.
“This was part of our compensation plan that was approved by our board of directors,” the source said. “All of our shareholders are on the board so all of our shareholders had a say in the allocation of bonuses to management.”
Mr. Murphy became an investor in Synacor in 2003 when a group of venture capital companies including Mr. Murphy’s firm, Advantage Capital Partners, invested in Synacor. Mr. Murphy joined Synacor’s board in 2004.
The bonuses in question were awarded in 2007 to all but the lowest-performing Synacor employees who were at the company for longer than six months, the source said.
“I don’t believe the [Republican’s] tactic will work because voters understand the differences between private companies and public companies,” said the source. “They understand the difference between a VC sitting on the board of a private firm and an executive at a public company receiving bailout money.”