Rand Capital Corp. President Pete Grum thinks the Buffalo venture capital firm is getting ready to reap some profits from the investments it has sewn over the last few years.
The value of Rand's investments nearly doubled last year to $16.8 million as several companies in its portfolio have moved beyond the early development stages and have grown markedly, boosting their value in the process.
"2006 was a great year, but it was the result of plans and investments that we've made over the years," Grum told Rand's shareholders during the company's annual meeting on Thursday.
"The investments have grown, and now we're seeing the results," he said. "These companies are maturing."
The growth in Rand's portfolio also has been rewarding for its shareholders. Rand's stock soared by 159 percent last year and its shares are up another 7 percent so far this year.
One of the first big payoffs from Rand's portfolio was a $1.3 million profit that the company reaped on its more than decade-long investment in Orchard Park medical device and anesthesia manufacturer Minrad International. Rand steadily sold off its shares in Minrad last year after the company went public.
Rand also bagged a $2.3 million profit from its investment in Innov-X Systems, a suburban Boston company that makes handheld equipment that can analyze the composition of materials. Rand still owns a nearly 9 percent stake in Innov-X after participating in a recent $29 million round of financing. Rand increased the value of its remaining holdings in Innov-X by more than $8 million to reflect the value that investors in the latest round of financing placed on the Woburn, Mass., company.
Rand also recorded an increase in the value of its stake in Buffalo-based Internet content provider Synacor Inc. by $3 million after the Buffalo technology company, which runs "portals" or home pages for high-speed Internet services, completed a $17 million round of financing in October.
"We're excited about the future," Grum said. "We have a strong portfolio. We have money to invest."
In all, Grum said Rand has about $6 million that it could invest in new companies, although finding those investments has been difficult recently. The company did not make any new investments during the first quarter.
"We're out looking," Grum said. "There are less deals."
But if banks tighten their commercial lending standards in the wake of weakening profits caused by problems with riskier home loans, Grum said he expects more opportunities to open up this year. "We usually step in where the banks won't," he said.
Grum thinks Rand could have even more cash to invest as 2007 unfolds as more of its investments mature, and possibly are acquired by other firms.
"It will be a fun couple of years," he said.