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2025 ANNUAL REPORT Nasdaq: RAND
Rand Capital Corporation (Nasdaq: RAND) is an externallymanaged business development company (BDC). Our investment objective is to generate current income and when possible, complement this current income with capital appreciation. As a result, our investments are primarily in higher yielding debt instruments in privately-held, lower middle market companies with committed and experienced management in a broad variety of industries. We primarily invest in businesses that have sustainable, differentiated and market-proven products, revenue of more than $10 million and EBITDA in excess of $1.5 million. Our investment activities are managed by our external investment adviser, Rand Capital Management, LLC. Consistent quarterly dividends, even through periods of lower investment activity Regular Quarterly Dividend $3.91 Supported by strong liquidity and incomegenerating portfolio Dividend strategy remains a priority amid dynamic conditions PORTFOLIO (FYE 2025) Number of Investments Fair Value 20 $48.5M Mix 79% 21% DEBT EQUITY 4Q Supplemental Dividend $0.18 $0.38 $0.56 $0.04 $0.40 $0.65 $0.95 $1.12 $1.16 2021 2022 2023 2024 2025
Dear Shareholders, 2025 was a disciplined year for Rand Capital, in which we navigated a slower deal environment, absorbed a significant portfolio event, and strengthened our balance sheet so we can continue to build a strong portfolio in 2026 and beyond. We ended the year with no debt, more than $23 million of total liquidity, and an income-oriented portfolio that we expect to continue to support our dividend. 2025 in Review Discipline in a muted market The backdrop in 2025 was characterized by uneven M&A activity, tighter senior lending, and cautious sponsors and borrowers. In that setting, we chose discipline over growth for growth s sake, recycling capital from repayments and realizations, managing through a difficult outcome for our investment in Tilson Technology, and refining the portfolio toward income-generating securities with selective equity upside. At December 31, 2025, net asset value (NAV) was approximately $52 million, or $17.57 per share. The decline in NAV per share versus year-end 2024 reflects dividends paid as well as realized and unrealized losses, particularly related to Tilson. While the decline in NAV was not our desired outcome, we believe our portfolio companies and our valuation approach leaves us well positioned to capture upside as conditions improve. Portfolio and Capital Recycling Income engine, fewer but better deployments At year-end, our investment portfolio had a fair value of $48.5 million across 20 portfolio companies. The decrease from year-end 2024 was driven primarily by meaningful loan repayments and realizations, together with valuation adjustments, rather than a strategic contraction in the business. In 2025, we received approximately $17.8 million from repayments and monetizations and deployed $6.6 million into new and follow-on investments, primarily interest-earning debt with equity participation when appropriate. Debt investments represented 79% of the portfolio by fair value, and equity accounted for 21%, in each case as of December 31, 2025. Tilson, Valuations, and Risk A one-time portfolio event impacted the size of the portfolio The most notable portfolio event in 2025 was Tilson s Chapter 11 filing following a contract dispute with a major customer. We responded by marking the investment down promptly as developments unfolded, ultimately realizing the loss of our investment through a bankruptcy process and asset sale. While disappointing, we view Tilson as a company-specific outcome, not a signal of broad weakness in our original 2015 equity underwriting. Outside of Tilson, valuation changes were consistent with a tighter credit environment. We continue to employ a consistent, bottom-up valuation process and maintain active oversight of portfolio companies, with particular attention to PIK usage, non-accrual risk, and sector trends. Financial Performance and Dividends Lower investment income, stronger net investment income and cash returns Total investment income in 2025 was $6.5 million, down from $8.6 million in 2024, driven by debt repayments, fewer originations, and lower fee income. Offsetting this, total expenses declined sharply, reflecting lower capital gains incentive fees, reduced interest expense after repaying our revolving loan, and lower base management fees. Net investment income rose to $5.3 million, or $1.80 per share, demonstrating the benefit of disciplined expense management. We paid total cash dividends of $1.72 per share in 2025. This included our regular quarterly dividend of $0.29 per share throughout the year, plus a $0.56 per share special dividend in the fourth quarter. The regular dividend remains grounded in sustainable net investment income, based on our estimated portfolio income throughout the year and is then adjusted at year end, through the special dividend. We began 2026 with the regular first quarter dividend of $0.29 per share.
Balance Sheet Strength Debt-free and liquid by design Our balance sheet is a key part of our investment case today. At December 31, 2025, we held $4.2 million in cash and cash equivalents, had no borrowings under our senior secured revolving credit facility, and had approximately $19 million of available borrowing capacity. Future borrowings (our cost of capital) should also benefit from Federal Interest rate modifications, with our contracted borrowing rate at SOFR + 3.5% or approximately 7.2% currently. This position means we are not forced to originate simply to support leverage. Instead, we can be patient, insist on structures and pricing that meet our risk-adjusted return criteria, and selectively deploy our leverage when we see opportunities that justify it. Outlook: Playing Offense in 2026 and Beyond Disciplined deployment from a position of strength We view 2026 as a year in which Rand Capital can shift from a primarily defensive stance to more active capital deployment, while maintaining our past discipline. Across the BDC landscape, sponsor and M&A activity is showing early signs of improvement, which we believe will translate into a more attractive opportunity set for yield-oriented debt investments. Our priorities are clear: 1. Redeploy capital from 2025 repayments into new income-generating assets, supporting consistent net investment income and the regular dividend. 2. Use leverage prudently to rebuild the investment portfolio without compromising our conservative balance sheet philosophy. 3. Preserve credit quality, with continued focus on underwriting standards, PIK exposure, and transparent valuations. We believe the disciplined work done in 2025 has created the foundation for capital deployment in 2026. We are focused on converting that foundation into sustainable earnings, stable dividends, and long-term NAV growth. The first step on that path is new deal origination in 2026, and we are focused on making that happen. On behalf of the Board of Directors and the Rand Capital team, thank you for your continued confidence and partnership. We look forward to updating you on our progress as we execute our 2026 plan from a position of strength. Sincerely, Robert M. Zak Chair of the Board of Directors March 13, 2026 Daniel P. Penberthy President and Chief Executive Officer
SEC FORM 10-K
 • shareholder letter icon 3/13/2026 Letter Continued (Full PDF)
 • stockholder letter icon 4/1/2024 RAND Stockholder Letter
 • stockholder letter icon 3/14/2025 RAND Stockholder Letter
 • stockholder letter icon More "Investment Companies & Venture Capital" Category Stockholder Letters
 • Benford's Law Stocks icon RAND Benford's Law Stock Score = 95


RAND Shareholder/Stockholder Letter Transcript:

2025
ANNUAL REPORT
Nasdaq: RAND

Rand Capital Corporation (Nasdaq: RAND) is an externallymanaged business development company (BDC). Our investment
objective is to generate current income and when possible,
complement this current income with capital appreciation. As a
result, our investments are primarily in higher yielding debt
instruments in privately-held, lower middle market companies with
committed and experienced management in a broad variety of
industries. We primarily invest in businesses that have
sustainable, differentiated and market-proven products, revenue
of more than $10 million and EBITDA in excess of
$1.5 million. Our investment activities are managed by our
external investment adviser, Rand Capital Management, LLC.
    Consistent quarterly
dividends, even through
periods of lower
investment activity
Regular Quarterly Dividend
$3.91
    Supported by strong
liquidity and incomegenerating portfolio
    Dividend strategy
remains a priority amid
dynamic conditions
PORTFOLIO (FYE 2025)
Number of
Investments
Fair
Value
20
$48.5M
Mix
79% 21%
DEBT
EQUITY
4Q Supplemental Dividend
$0.18
$0.38
$0.56
$0.04
$0.40
$0.65
$0.95
$1.12
$1.16
2021
2022
2023
2024
2025

Dear Shareholders,
2025 was a disciplined year for Rand Capital, in
which we navigated a slower deal environment,
absorbed a significant portfolio event, and
strengthened our balance sheet so we can
continue to build a strong portfolio in 2026 and
beyond. We ended the year with no debt, more
than $23 million of total liquidity, and an
income-oriented portfolio that we expect to
continue to support our dividend.
2025 in Review
Discipline in a muted market
The backdrop in 2025 was characterized by
uneven M&A activity, tighter senior lending, and
cautious sponsors and borrowers. In that setting,
we chose discipline over    growth for growth   s
sake,    recycling capital from repayments and
realizations, managing through a difficult outcome
for our investment in Tilson Technology, and
refining the portfolio toward income-generating
securities with selective equity upside.
At December 31, 2025, net asset value (NAV) was
approximately $52 million, or $17.57 per share.
The decline in NAV per share versus year-end
2024 reflects dividends paid as well as realized
and unrealized losses, particularly related to
Tilson. While the decline in NAV was not our
desired outcome, we believe our portfolio
companies and our valuation approach leaves us
well positioned to capture upside as conditions
improve.
Portfolio and Capital Recycling
Income engine, fewer but better deployments
At year-end, our investment portfolio had a fair
value of $48.5 million across 20 portfolio
companies. The decrease from year-end 2024
was driven primarily by meaningful loan
repayments and realizations, together with
valuation adjustments, rather than a strategic
contraction in the business.
In 2025, we received approximately $17.8 million
from repayments and monetizations and deployed
$6.6 million into new and follow-on investments,
primarily interest-earning debt with equity
participation when appropriate. Debt investments
represented 79% of the portfolio by fair value, and
equity accounted for 21%, in each case as of
December 31, 2025.
Tilson, Valuations, and Risk
A one-time portfolio event impacted the size of the
portfolio
The most notable portfolio event in 2025 was
Tilson   s Chapter 11 filing following a contract
dispute with a major customer. We responded by
marking the investment down promptly as
developments unfolded, ultimately realizing the
loss of our investment through a bankruptcy
process and asset sale. While disappointing, we
view Tilson as a company-specific outcome, not a
signal of broad weakness in our original 2015
equity underwriting.
Outside of Tilson, valuation changes were
consistent with a tighter credit environment. We
continue to employ a consistent, bottom-up
valuation process and maintain active oversight of
portfolio companies, with particular attention to PIK
usage, non-accrual risk, and sector trends.
Financial Performance and Dividends
Lower investment income, stronger net investment
income and cash returns
Total investment income in 2025 was $6.5 million,
down from $8.6 million in 2024, driven by debt
repayments, fewer originations, and lower fee
income. Offsetting this, total expenses declined
sharply, reflecting lower capital gains incentive
fees, reduced interest expense after repaying our
revolving loan, and lower base management fees.
Net investment income rose to $5.3 million, or
$1.80 per share, demonstrating the benefit of
disciplined expense management.
We paid total cash dividends of $1.72 per share in
2025. This included our regular quarterly dividend
of $0.29 per share throughout the year, plus a
$0.56 per share special dividend in the fourth
quarter. The regular dividend remains grounded in
sustainable net investment income, based on our
estimated portfolio income throughout the year and
is then adjusted at year end, through the special
dividend. We began 2026 with the regular first
quarter dividend of $0.29 per share.

Balance Sheet Strength
Debt-free and liquid by design
Our balance sheet is a key part of our investment
case today. At December 31, 2025, we held
$4.2 million in cash and cash equivalents, had no
borrowings under our senior secured revolving
credit facility, and had approximately $19 million of
available borrowing capacity. Future borrowings
(our cost of capital) should also benefit from
Federal Interest rate modifications, with our
contracted borrowing rate at SOFR + 3.5% or
approximately 7.2% currently.
This position means we are not forced to originate
simply to support leverage. Instead, we can be
patient, insist on structures and pricing that meet
our risk-adjusted return criteria, and selectively
deploy our leverage when we see opportunities
that justify it.
Outlook: Playing Offense in 2026 and
Beyond
Disciplined deployment from a position of strength
We view 2026 as a year in which Rand Capital can
shift from a primarily defensive stance to more
active capital deployment, while maintaining our
past discipline. Across the BDC landscape,
sponsor and M&A activity is showing early signs of
improvement, which we believe will translate into a
more attractive opportunity set for yield-oriented
debt investments.
Our priorities are clear:
1. Redeploy capital from 2025 repayments into
new income-generating assets, supporting
consistent net investment income and the
regular dividend.
2. Use leverage prudently to rebuild the
investment portfolio without compromising our
conservative balance sheet philosophy.
3. Preserve credit quality, with continued focus on
underwriting standards, PIK exposure, and
transparent valuations.
We believe the disciplined work done in 2025 has
created the foundation for capital deployment in
2026. We are focused on converting that
foundation into sustainable earnings, stable
dividends, and long-term NAV growth. The first
step on that path is new deal origination in 2026,
and we are focused on making that happen.
On behalf of the Board of Directors and the Rand
Capital team, thank you for your continued
confidence and partnership. We look forward to
updating you on our progress as we execute our
2026 plan from a position of strength.
Sincerely,
Robert M. Zak
Chair of the Board of Directors
March 13, 2026
Daniel P. Penberthy
President and Chief Executive Officer

SEC FORM 10-K


shareholder letter icon 3/13/2026 Letter Continued (Full PDF)
 

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