Rand Capital Corp. is looking for deals

May 01, 2009 (The Buffalo News - McClatchy-Tribune Information Services via COMTEX) -- RAND | Quote | Chart | News | PowerRating -- Rand Capital Corp. isn't feeling the credit squeeze.

The Buffalo venture capital firm has nearly $2 million in cash and could tap almost $2 million more through its small business investment arm. Rand also could raise another few million after shareholders Thursday gave the company more flexibility to sell additional shares of its stock over the next year.

Now, all Rand executives Pete Grum and Daniel Penberthy have to do is find the right deals.

"There are a lot of deals out there," said Grum, Rand's president, following the company's annual shareholders meeting Thursday. "We're a little hesitant, but we're seeing a lot."

With companies finding it harder to raise money from private investors as the economy weakens, and banks imposing tougher terms on loans to fledgling or growing businesses, Grum said Rand's available cash puts it in a position to step in when the right deal comes along.

That could be with a new company. Or it could be with one of the nearly two dozen companies that already have investments from Rand -- an option that Grum said is appealing because of the familiarity Rand executives already have with those businesses.

The tight credit markets and sagging economy also means that companies that currently have bank financing could be in the market for financing from investment companies, like Rand, as their businesses struggle in a down market, potentially resulting in costly violations of their loan terms.

"There are companies out there that are getting in trouble with their banks," typically firms that are bigger than the early-stage businesses that Rand frequently invests in, Grum said.

"I think we're in good shape," Grum said. "It's a good time to have money."

Rand valued its investments at $20.2 million, or $3.53 per share, at the end of March, up about 2 percent from the end of 2007. "2008 was a good year for us, but it also was a really challenging year," Grum said.

One of those challenges that Rand faced last year is the same one its executives are confronting this year: Finding worthwhile investments in a shrinking economy. Rand made three new investments last year.

The company expects to have even more flexibility to raise additional funds, after shareholders approved a measure that gives the firm the ability to sell additional shares of its stock even if the price of the new shares is less than the underlying value of the company's assets per existing share.

Previously, Rand wasn't allowed to sell additional shares unless they are priced at or above the current net asset value per share of its stock.

Grum said he expects Rand to sell additional shares at some point over the next year, but company officials had not decided how many shares to sell or when to do it.

drobinson@buffnews.com

To see more of The Buffalo News, N.Y., or to subscribe to the newspaper, go to
http://www.buffalonews.com. Copyright (c) 2009, The Buffalo News, N.Y.
Distributed by McClatchy-Tribune Information Services. For reprints, email
tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax
to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave.,
Suite 303, Glenview, IL 60025, USA.

More News:   Market Updates | Stock Alerts | All Trading News | Stock Index