Rand Capital Corporation · NASDAQ:RAND
Rand Capital — Shareholder Meeting (April 2016)
19 slides from Rand Capital's shareholder meeting presentation, Apr 21, 2016
Slide 1: 2016 Annual Shareholders Meeting
2016 Annual Shareholders Meeting April 21, 2016 Allen F. “Pete” Grum President & CEO NASDAQ: RAND
Slide 2: Forward-looking statements
Statements included in these slides that do not relate to present or historical conditions are “forward- looking statements” within the meaning of that term in Section 27A of the Securities Act of 1933, and in Section 21E of the Securities Exchange Act of 1934. Additional oral or written forward-loo
Slide 3: Five Consecutive Years of Net Asset Value (NAV) Per Share Growth
Five Consecutive Years of Net Asset Value (NAV) Per Share Growth (AV per Share is After Tax) 2010 2011 2012 2013, 2014 2015 SIGNIFICANT Exits: Innov-X ‘Synacor Liazon BinOptics Gemeorll Ultra-Scan ‘QuaDPharma Synacor ‘© 2016 Rand Capital Corporation 3
Slide 4: Rand Capital Exits
Rand Capital Exits* December 31, 2010 - March 31, 2016 Average j Full-Cycle : Gross Cash | Achieved Investments | Holding sesastat) Generated Cash IRR Exited Length (Interest & Gain) | Multiple (years) “Te 6.3 $19.0mm $67.5mm 3.6 30.2% More than tripled cash investment * Includes Gemcorsale ‘© 2016
Slide 5: Outperformed 5-year BDC Index and S&P
Outperformed 5-year BDC Index and S&P 500 65.00% Share Price Change Es 3 z 25.00% Cr a a a ap ph st os al oo Ft ext al ot —Rand —S&P 500 Index +—S8&P BDC Index ‘© 2016 Rand Capital Corporation 5
Slide 6: Rand ranked #1 BDC with highest NAV/Share growth among BDCs
Rand ranked #1 BDC with highest NAV/Share growth among 32 BDCs Rand’s NAV grew 4.7% 2014 to 2015 Year-over-Year NAV/Share Growth ‘© 2016 Rand Capital Corporation 6
Slide 7: 12-Month Total Shareholder Return Comparisons
12-Month Total Shareholder Return Comparisons RAND is up 15.4% 0.0% [ a = = -10.0% | J fl J -20.0% Ses Pee EREE FE ‘Source: Seacap Financial BDC Group as of March 31, 2016 ‘© 2016 Rand Capital Corporation 7
Slide 8: Success Story
Success S v Acquired: 6/28/04 = Revenue increased to > 5x = Workforce grew from 29 to 95 = Investment: 31% equity position v Equity cost: $625 thousand ¥ Sold 3/31/16 for ~ $50 million v Rand gross proceeds ~$15.2 million v Return on invested capital: ~11x v Internal rate of return: ~64% Leading des
Slide 9: Five Largest Investments
Five Larg $26 million total portfolio, 32 companies z Investments Year ‘ai bs a ‘ompany a _ : industry ‘otal (foes) Seales Portfolio Rh@onix Rheonix, inc. $2.9 2009 fesneares testis 12% - Software—Predictive OUTMATCH — Outmatch $2.1 Doig «Somer fee 8% ES SOCIALFLOW SocialFlow $2.1 2013 ee ai 8% GENI
Slide 10: Largest investment details
Te y Initial equity investment: 10/29/09 Initial equity investment: 11/18/10 = $680 thousand follow-on investment = $500 thousand follow-on investment (2015) (2015) ; i 7 4% equity position v Sad equity position Equity cost: $2.1 million 7 Equity cost: $2.8 million Equity fair value (3/31/16):$2.1 m
Slide 11: (S inmiltions)
(S inmiltions) "3 SOCIALFLOW 20114 2012 2013 2014 2015 © 2016 Rand Capital Corporation 1
Slide 12: Strong History
Strong History: v Completed busiest investment periods in 40+ year history * >$5 million invested in 2012, 2013, 2014 and 2015 * Record level of investment in 2015 at $7.0 million into 16 portfolio companies v Large exits over last 4 years v Current portfolio companies at varying stages of maturity
Slide 13: Evaluated Options
Evaluated Objective: Drive Shareholder Value Options Considered - Voluntary Delisting from NASDAQ / Deregistering from SEC Reporting Also Called: Going Dark = Significant negative impact to trading liquidity and value - Electing RIC Status (Special Tax Vehicle) * Requires ~$30 million cash distribut
Slide 14: Objective: Drive Shareholder Value
Objective: Drive Shareholder Value Strategies to Pursue + Acquisitions & Mergers = Looking for opportunities » Willconsider value-maximizing sale transaction + Accelerated Growth « More aggressive plan with larger capital base « Enhanced relationship with SBA: Expand borrowings ‘© 2016 Rand Capital
Slide 15: Long-Term Strategy
Long-Term Strategy Increase rate of growth with larger investment capacity Increase leverage for greater investment capability Increase participation in transactions Broaden investment network and geography Strengthen investor communications Create scale to add talent Higher funding levels: Past: $3
Slide 16: Available Cash Balance: ~$12 million
Available Cash Balance*: ~$12 million v Basis for increased leverage with SBA Uses of Cash ¥ Follow-on investments v New investments v Stock repurchases v Debt repayment ¥ Acquisitions *At the SBIC, net of escrow and estimated taxes ‘© 2016 Rand Capital Corporation 16
Slide 17: Continue increased level of investor communication
Y Continue increased level of investor communication = Press releases — business events and portfolio company successes = Website improvements v Increase outreach effort to investment community = Present at 2 investor conferences = Host 1:1 meetings: New York, Boston, Toronto, Atlanta v¥ Objectives
Slide 18: Strong performance: financially and operationally
Strong performance: financially and operationally Proven management team Delivers shareholder returns Strategy for NAV growth Only early and expansion stage SBIC fund in Upstate New York Solid reputation among investment partners Ss & S&S S S a, * Decisive and responsive y Opportunistic share buy ba
Slide 19: 2016 Annual Shareholders Meeting
2016 Annual Shareholders Meeting April 21, 2016 NASDAQ: RAND