Disclaimer: I think some viking settlements like Isle of Man & Iceland may have used democracy for longer, but I don't know how long any of them manage to be independent states.
From what I understand political factions in "The Most Serene Republic of Venice" was largely based around ancient families, but did these families unite into two opposing factions under Venetian Democracy?
If not is it correct to attribute this to the voting system they used, or were there other factors that kept the political landscape fractured?
EDIT:
I found a good political science paper on this:
http://www.rangevoting.org/HPL-2007-28R1.pdf
But the only historical data it contains of relevance is;
...the 75 Doges elected in the five centuries in which this protocol was used have only 44 surnames between them.
The number of families of oligarchs in Venice in the late Thirteenth Century was 206.
So it seems like 2 families didn't dominate, though 2 factions would likely contain more than 2 families.
Who said Venice was a democratic state?? It was an oligarchy. A closed order of patricians elected the Doge who was then ceremonially presented to the people for acclamation. As Venice went on the patricians took over most of the functions of government, circumscribing the power of the Doge to a remarkable degree through the council of ten and was supervised at all times. He could not even open diplomatic communications without a minder.
Athens was a democracy, not Sparta, just to let you know.
I can answer this question more fully tomorrow, but what do you mean by the Venetian Empire? Do you mean a separate period of Venetian history or do you mean how government was accomplished in the colonies?
Also, to echo what others have said, Venice was no democracy. Even as a republic, its representation was incredibly narrow.