CapNet folds after six years as tech advocate

Once one of the few voices for the high-tech industry in Washington, CapNet announced yesterday that it would close its doors at the end of the year, its original mission consumed by other, better funded lobbying coalitions.

“There has been considerable consolidation in the industry and among CapNet members,” said Jack Krumholtz, Microsoft’s chief lobbyist, who also served as co-chair of CapNet.

“The important role that CapNet filled as a specialty organization can now be achieved by other groups.”

Lobbyist Tim Hugo, who is a Republican member of the Virginia House of Delegates, founded CapNet in 1999. He left the group as its executive director in April.

CapNet was unlike other trade groups in town that mix lobbying and member support services. It charged relatively small membership dues — a premium membership cost just $15,000 — and limited its role to winning political support for the high-tech community, which at the time of CapNet’s founding had little presence in Washington, principally through fundraisers.

Ralph Hellman, the vice president of government relations at the Information Technology Industry Council (ITI), said CapNet was formed at a time when the industry had yet to “get its act together in Washington.”

“But now there are a lot of trade groups, and there are high-tech fundraisers all the time,” Hellman said.

Other high-tech groups include ITI, the Electronics Industry Alliance, the Professional Services Council, the Business Software Alliance and the Information Technology Association of America (ITAA). TechNet, another tech group that is based in Silicon Valley and once discussed merging with CapNet, recently opened an office in Washington as well.

Krumholtz said the industry wants still greater consolidation among these groups: “We hope that the dissolution of CapNet will encourage further discussion of consolidation.”

Hellman added: “We hope this is first of several steps to consolidate.”

One high-tech lobbyist who asked not to be named said the discussion has focused on the ITAA. An ITAA spokesman called the group a “strong organization” that has had 11 straight years of dues growth.

“Our programs are expanding, and kind of rumors are in the background all the time,” said spokesman Bob Cohen, “We’re just continuing to do what we do.”

The high-tech picture won’t get immediately clearer even with CapNet’s departure, apparently.

Hugo said he and some of CapNet’s member companies were discussing reviving the group on some level within another group. He said there could be an announcement in the next 30 days.

“We’re talking about putting together some events or mergers or working with other associations,” Hugo said.

One of the group’s main missions was to hold fundraisers to gain support on Capitol Hill.

Several high-tech companies still do not have political action committees, but spending among the industry has skyrocketed in the past decade and while once focused primarily on advancing Democrats, is now increasingly bipartisan.

Hugo estimated that the group raised over $1 million for candidates. CapNet also co-sponsored, usually with a member company, lunches with top policymakers in Congress.