We Have a History of Strong ROI's
We're proud of our previous investments and believe that they deserve to be highlighted to better showcase the extent and nature of our investment behavior.
Here are some selected success stories:
Founded in 1937 by Thomas Speller Sr., Gemcor invented the automated fastening process to support aircraft production during World War II. Gemcor’s Drivmatic® process quickly became an industry standard for automated aircraft assembly.
However, in the early 2000s, given global terrorism and resulting industry cyclicality as well as limited historical investment in its business, Gemcor’s financial position significantly eroded. The management team sought partners to revitalize and recapitalize the business, to reposition it on solid footing.
In June 2004, Rand partnered with another investor, along with the local Erie County Industrial Development Agency and the senior management team, to recapitalize Gemcor. Rand invested $625,000 for a 31% equity stake and provided $250,000 of debt capital. In 2009, Rand provided a $500,000 subordinated promissory note and in 2012, Rand provided an additional $1 million subordinated promissory note.
Along the way, Rand worked with the senior management team to reorganize the company, change its business practices and invest in needed equipment to improve efficiency.
Armed with a stronger business model and favorable industry outlook, the company successfully emerged. Over time, Gemcor has applied its proprietary electric drivmatic riveting process to produce highly engineered, high precision, cutting edge machines. Since Gemcor’s inception over 75 years ago, over 2200 Gemcor systems have been shipped worldwide as the company continues to be the favored, more reliable solution leading the aerospace industry in automated fastening.
Revenue increased by more than 5x over 12 years while in Rand’s portfolio, to approximately $35 million. During that period, the workforce grew from 29 to 95.
In March 2016, Gemcor was sold to Ascent Aerospace, a leading integrator of aircraft assembly line solutions. Rand realized total proceeds of approximately $15 million, representing a return on its invested capital of approximately 11x and an internal rate of return of approximately 64%.
BinOptics was founded in the technology incubator of Cornell University, in Ithaca, New York. The company sought capital to support its development and marketing of specialty semiconductor lasers. BinOptics evolved to be a leading merchant provider of indium phosphide lasers for data centers, mobile backhaul, silicon photonics and access networks.
In November 2011, Rand made its initial investment of approximately $700,000 in BinOptics Series 2 convertible preferred shares, immediately followed by an additional equity investment of approximately $490,000 in December 2011 for more of the same class of shares. To support further growth, in December 2012, Rand participated in a follow-on capital raise and provided approximately $609,000 for additional shares from the same class, resulting in a total investment of approximately $1.8 million which equated to a 4% ownership interest.
The BinOptics product offering quickly and successfully penetrated the marketplace.
In December 2014, M/A-COM Technology Solutions Holdings, Inc., a leading supplier of high-performance RF, microwave, millimeterwave and phototonic products acquired BinOptics. Rand realized total proceeds of approximately $10.1 million, representing a return on its invested capital of approximately 5.5x and an internal rate of return of over 75%.
Liazon was founded in 2007 by healthcare and insurance veterans, who realized that the technological revolution that had fundamentally altered our lives in so many ways could change how we choose, and use, health insurance and other employee benefits, for the better. They formed Bright Choices ® which gathers products from leading national carriers and provides an online store where consumers can shop from among diverse benefit arrays.
Rand initially invested $500,000 by providing subordinated debt with warrants as a bridge loan in November 2010. As a participant in the company’s next equity financing, which included full repayment of the bridge loan, Rand reinvested $820,000 in April 2011, participating with three other investment partners. To support the company’s growth, Rand once again participated in a further equity capital raise, providing $275,000 in April 2012. Rand’s equity investment was approximately $1.1 million for a 3% position.
To make the employee benefits selection process simple and effective, the Liazon team built in technology and education so that people can make informed decisions relative to their benefits choices and needs. The results have launched an industry revolution.
Revenue increased by more than 2.5x over three years while in Rand’s portfolio, to approximately $6 million. During that period, the workforce grew from 27 to 101.
In December 2013, Liazon was acquired by Towers Watson, now Willis Towers Watson, a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth, Rand realized total proceeds of approximately $6.6 million, representing a return on its invested capital of approximately 4x and an internal rate of return of approximately 97%.
Founded in 1998, Synacor was formed to enable cable, satellite, telecom and consumer electronics companies to deliver TV Everywhere, digital entertainment, services and apps to their end-consumers, strengthening those relatioships while monetizing the engagement.
Rand’s initial investment was in November 2002, providing $350,000 of subordinated debt with warrants to recapitalize the company. It was followed by a $400,000 equity investment in October 2004 and an additional $158,000 equity investment in October 2006 (net of debt repayment). In November 2007, Rand exercised its warrants, with an additional investment of $350,000. Rand’s total equity investment was approximately $908,000 for a 4% position.
The company has evolved to become a trusted technology development, multiplatform services and revenue partner.
Revenue increased by more than 60x over 13 years while in Rand’s portfolio, to approximately $110 million. During that period, the workforce grew from 25 to 315.
In February 2012, Synacor shares began trading on the Nasdaq by executing an Initial Public Offering (IPO). Rand sold some of its shares into the IPO and opportunistically sold its remaining shares over time, completing its exit in June 2015. Rand realized approximately $4.1 million of proceeds upon the sale of its equity stake, realizing a return on its invested capital of approximately 3x and an internal rate of return of approximately 16%.
Innov-X Systems, Inc.
In 2001, Don Sackett founded Innov-X Systems, Inc., located in Woburn, Massachusetts, with several of his former co-workers by raising $800,000 in start-up capital from family, friends and angel investors. Mr. Sackett had a vision for manufacturing a specialty line of handheld XRF (X-Ray Fluorescent) alloy metals analyzers, around a Compaq, pocket-PC platform. The founding management team believed they had a winning strategy, which utilized off the shelf components and a safer technology (their competitor's units were primarily based on radioactive isotopes) while utilizing proprietary software algorithms, which allowed the units to be more easily calibrated, used and upgradeable in the future.
Though the founding management team originally planned to sell online x-ray equipment for manufacturing applications, they soon learned that the consumer "marketplace" demands for the product were for handheld-type units. Innov-X began selling its first hand-held units in 2002. However, the early demand for the product caused a need for growth capital for the business.
In 2003, the company began to seek out this capital to fund the growth. A Buffalo, New York-based consultant was working with the entrepreneur for some time and an introduction to Rand was made. Rand visited the company and attended an industry trade show to learn more about this emerging market sector.
Over the next six to nine months, Rand SBIC helped to identify another institutional investor to partner with Rand SBIC for the investment opportunity and was able to negotiate an investment term sheet that was acceptable to both Innov-X and the investors group.
In 2004 and 2005, Rand SBIC funded a total of $600,000 of investment capital into Innov-X, in the form of a five-year term subordinated debenture, with warrants for an equity position in the company. Rand SBIC's co-investor provided the same amount of funding. Rand was also appointed to the Innov-X Board of Directors.
The company continued to experience growth in demand for its products, and in doing so, experienced issues faced by many high growth companies, including production capacity, staffing, marketing, quality, identifying new markets for products, expanding internationally and the need for additional senior management. The Board of Directors, including the investors, helped the management team with many of these issues, though it was the entrepreneurial drive of the CEO/Founder that was the driving force for the success of the company through these many challenges. Mr. Sackett continued to lead the company to record sales and profitability levels. In addition, during this time, Innov-X kept close communication and a working relationship with Key Bank, who provided constant financial support to the growing business.
In 2006, new international regulations regarding testing of noxious metals in electronics resulted in unprecedented sales and demand for Innov-X's novel handheld instruments. This growth attracted the interest of a large Boston-based investment fund, Summit Partners.
In December 2006, a minority position of the company was sold to Summit in the form of Preferred Equity, for a total investment of $27 million. Rand SBIC's debentures were repaid and thus realized a gain of $2.2 million from a partial sale of its equity holdings. As part of the Summit financing, Rand re-invested over $1 million back into the company, as a participant in the new financing.
In total, Rand made an equity investment of $1.7 million through three investments, acquiring an equity ownership of approximately 9%.
Innov-X experienced record revenue and grew from 17 employees to approximately 150 over less than eight years while in Rand’s portfolio. In August 2010, Rand sold its investment in Innov-X, realizing total proceeds of nearly $5.4 million, representing a return on its invested capital of approximately 4.3x and an internal rate of return of approximately 82%.