Rand Capital Corp. soon will be awash in cash and the Buffalo venture capital firm’s portfolio is worth more than ever.
The challenge in 2016 will be to find new investments to make with its more than $19 million in cash.
Rand’s cash holdings are set to swell after its biggest single investment, Gemcor, was acquired in a deal that turned Rand’s $625,000 investment in the West Seneca automated fastening systems manufacturer into a nearly $13.4 million profit. Adding that money to the $5.8 million in cash that Rand already had on its books at the end of last year, leaves Rand with more than $19 million for new investments.
The Gemcor sale, when it closes by the end of the month, will leave Rand with more than half of its $33.9 million portfolio in cash. The net asset value of Rand’s investments grew by 5 percent last year to $5.35 per share and the firm’s portfolio has grown by an average of 13.5 percent annually during the past 10 years.
As Rand’s portfolio has grown, the firm has been able to broaden its ties with other investment firms and broaden its geographic reach beyond Western New York, said Pete Grum, the company’s president. Rand often partners with other venture capital firms on investments as a way to reduce its risk when it puts money into a company, and its growing portfolio also is allowing it to make bigger investments when it finds an opportunity it likes.
During the past year, Rand made $7 million in new investments – the most that the company has made in a single year – in 16 companies. That included an additional $200,000 investment in BeetNPath, an Ithaca company that makes frozen entrees and side dishes from whole grain steel cut oats.
Rand also wrote down the value of three of its 31 portfolio companies by a total of $2.5 million, including Intrinsig Materials, a Rochester printable electronics producer; First Wave Products Group, a Batavia company that makes an automated pill crusher; and SciApps, a Massachusetts company that makes portable instruments that can identify compounds, minerals and elements.