Backstage at a cavernous Denver nightclub called the Cervantes Masterpiece Ballroom, Roger McNamee sits in a blue plastic chair, cradling his Martin acoustic guitar and fretting. The veteran Silicon Valley investor looks around at the members of his new band Moonalice—six seasoned players whom he’d flown in, at his own expense, from around the country—and delivers the bad news.

“Nobody’s out there,” says McNamee, 51. On the other side of a flimsy, decal-covered door, the warm-up act, Storytyme, rocks out to a nearly empty room. McNamee frowns slightly and tucks wisps of his graying shoulder-length hair behind both ears. “The promoter said they would bring 50 to 100 people with them,” he says. “They appear to have brought between four and six.”

His bandmates nod solemnly. It’s not the first time they’ve outnumbered their audience. When someone mentions that Storytyme’s members are a trio of brothers in their twenties, Moonalice’s bass player, Jack Casady (who, in 1965, when he was in his twenties, joined the psychedelic-rock band Jefferson Airplane), sets down the World War II novel he’s reading. “That explains why there’s no one here,” he says, chuckling grimly. “Only one set of parents.”

McNamee shuts his eyes and keeps them shut. He made his name in a world far away from this grunge pit, whose floorboards stink of beer and where a chipped disco ball twirls slowly overhead. This Ivy League-educated, self-described geek has compiled a remarkable investment record that has given him near-wizard status on Sand Hill Road, the Bay Area tech industry’s main artery for capital. Known as a savvy strategist with a gift for anticipating technological change, McNamee has spent the past two decades guiding several top-performing funds—first at T. Rowe Price, the giant mutual fund manager, and then at two private equity shops he co-founded. Now he’s leading his third firm, Elevation Partners, whose profile—thanks to the involvement of U2 lead singer Bono—is even higher than the amount in its $1.9 billion war chest. (View slideshow.)

The midsize fund, which offers what McNamee calls “the T.L.C. of venture capital” to mature companies facing technology-related challenges, represents something of a comeback for him. In 2001, he had two strokes and underwent open-heart surgery. But a professional setback two years later was, in a sense, more devastating. Though it has never been made public until now, McNamee was ousted in 2003 from his previous fund, Silver Lake Partners, the renowned investment group he’d founded only four years earlier with three others. Now he’s out to show that Elevation and his band can rise concurrently, and he with them.