Featured in The Wall Street Transcript’s Best CEO Interviews of 2015
Allen F. Grum, President and CEO of Rand Capital Corporation (NASDAQ:RAND) told TWST this year the defining characteristic setting his BDC apart from others is the focus on management and whether they are people he can do business with for the next five years.
“There are some characteristics of the types of businesses that we look at. We don’t invest in retail; we don’t really invest in restaurants. We do like to invest in companies that have an emerging product, service or technology concept with good growth prospects. We also then want to make sure that we can find other investors to invest alongside of us. The real issue is whether it is a company we are comfortable with and if we are comfortable with management,” he said.
He says RAND focuses on western and upstate New York state, preferring to invest locally in businesses the BDC can easily access.
“Venture capital, by its nature, is somewhat of a regional business. It is a very hands-on business, and we spend a lot of time with our portfolio companies. It makes sense that we want them in a region or an area where we can easily access them. It is not like when you buy a stock and then decide you don’t like that stock so you sell it the next day. It is a long-term relationship. We are in business with our operating partners for many years. All that means that we tend to invest locally,” he said.
Another focus for Rand Capital is small businesses, Grum says.
“The SBIC program is important for small investors like us. In essence, it creates a situation where the SBA is our biggest investor and biggest partner. That allows us access to very-low-interest-rate money. We borrow 10-year money from them at very good pricing. Right now, it’s in the low- to mid-3% area,” he said.
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