Craig Berkman, a prominent Portland, Oregon, technology investor and a former chairman of the state's Republican Party, came up short when he sought the party's nomination for governor in 1994. Now he faces challenges as an investment manager.

On January 1, Berkman, 63, stepped down as general partner of three high-tech venture capital funds that he had formed between 1998 and 2000. Since the dot-com bubble burst, the funds -- Synectic Ventures I, II and III -- had lost three quarters of their value. His departure followed more than a year of legal wrangling with institutional investors led by British Columbia Investment Management, a Canadian pension agency that had put in about half of the funds' $75 million in total capital and wanted Berkman out.

"We suggested to Craig Berkman that he transfer his managerial responsibilities, and it happened pretty fast," says Steve English, an attorney in the Portland office of law firm Bullivant Houser Bailey who represents the limited partners. Gary Goldstick, a Lake Oswego, Oregon­based consultant specializing in business turnarounds, has taken over the funds for now and says they will be wound down.

Lawyer English says he is looking into whether loan transactions among Berkman's funds "were done with full disclosure and at arm's length." Berkman tells Institutional Investor that those interfund loans -- he pegs them at $4.7 million -- were aboveboard and that most have been repaid in cash.

Berkman, who launched his tech career in 1967 as a co-founder of semiconductor equipment maker Applied Materials, still manages three other Synectic funds, whose sizes he declines to reveal. He disputes the contention that he was pushed aside, saying that "it was a mutually agreed-upon process." He predicts that by the end of the first quarter, the limited partners will have earned, either in cash or expected cash, returns equal to about 30 percent of committed capital -- about average for funds of their vintages. He expects one or two portfolio companies to be sold in the next 18 months. "The funds' residual value could come to $200 million or more," he says, ever optimistic.