RAND CAPITAL CORP, N-2, 1997-04-22

RAND CAPITAL CORP
N-2, 1997-04-22

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-2

[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No. _____
[ ] Post-Effective Amendment No. _____

(Check appropriate box or boxes.)

Rand Capital Corporation
(Exact Name of Registrant as Specified in Charter)

2200 Rand Building, Buffalo, New York 14203
(Address of Principal Executive Offices)(Zip Code)

Registrant's Telephone Number, including Area Code (716) 853-0802
________________________________________

Allen F. Grum, President
Rand Capital Corporation
2200 Rand Building
Buffalo, New York 14203
(716) 853-0802

(Name, address and telephone number, including area
code, of agent for service)

Copies of all communications sent to agent for
service of process should be sent to:

Ward B. Hinkle, Esq.
Hodgson, Russ, Andrews, Woods & Goodyear, LLP
1800 One M & T Plaza
Buffalo, New York 14203

Approximate Date of Proposed Public offerings: As soon as
practicable after the effective date of this Registration
Statement.

If any securities being registered on this form will be offered
on a delayed or continuous basis in reliance on Rule 415 under
the Securities Act of 1933, other than securities offered in
connection with a dividend reinvestment plan, check the following
box: [X]

It is proposed that this filing will become effective (check
appropriate box)
[X] when declared effective pursuant to section 8(c)

Calculation of Registration Fee Under the Securities Act of 1933

Proposed Proposed
Title of Maximum Maximum Amount of
Securities Being Amount Being Offering Price Aggregate Registration
Registered Registered Per Share (1) Offering Price Fee

<S> <C> <C> <C> <C>
Common Stock 1,791,122 $1.688 $3,023,414 $916.09
</TABLE>

(1) Based on the average bid and asked prices on April 17, 1997.
<PAGE>
RAND CAPITAL CORPORATION
Registration Statement of Form N-2

CROSS REFERENCE SHEET

Part A

Item Number Caption

1. Outside Front Cover Outside front cover

2. Inside Front and Outside
Back Cover Page Inside front cover

3. Fee Table and Synopsis Fee Table; Summary

4. Financial Highlights Financial Highlights

5. Plan of Distribution Cover page; Plan of
Distribution

6. Selling Shareholders Selling Shareholders

7. Use of Proceeds Use of Proceeds

8. General Description of the
Registrant Summary; History and
Business

9. Management Management

10. Capital Stock, Long-Term Debt,
and Other Securities Capital Stock;
Dividend Policies

11. Defaults and Arrears on Senior
Securities Not Applicable

12. Legal Proceedings Legal Proceedings;
Supplement

13. Table of Contents of the
Statement of Additional
Information Table of Contents of
Statement of
Additional
Information

Part B

Item Number Caption

14. Cover Page Cover page

15. Table of Contents Table of Contents

16. General Information and History Not applicable

17. Investment Objective and Policies Portfolio Turnover

18. Management Management

19. Control Persons and Principal
Holders of Securities Control Persons and
Principal Holders of
Securities

20. Investment Advisory and Other Services Investment Advisory
and Other Services

21. Brokerage Allocation and Other
Practices Allocation of
Brokerage

22. Tax Status Tax Status

23. Financial Statements Financial Statements

Part C

Information to be included in Part C is set forth under the
appropriate Item, as numbered in Part C of this Registration
Statement.
<PAGE>
PROSPECTUS
RAND CAPITAL CORPORATION
1,791,122 COMMON SHARES
__________________________

Rand Capital Corporation (the "Company" or "Rand") is a
registered investment company that is classified as a
diversified, closed-end management company. Its objective is
long-term capital appreciation through high risk venture capital
investments in companies having growth potential but whose
securities, in most cases, have no public market. The Company's
office is at 2200 Rand Building, Buffalo, New York 14203,
telephone number (716) 853-0802.

The securities offered hereby will be offered and sold by
the selling shareholders described under "Selling Shareholders"
(the "Selling Shareholders") for their respective accounts. Each
Selling Shareholder will receive all of the net proceeds from the
sale of the Shares owned by such shareholder. The distribution of
the Shares by the Selling Shareholders may be effected from time
to time in one or more transactions in the over-the-counter
market or in negotiated transactions at market prices prevailing
at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Company will not receive any
of the proceeds from the sale of the Shares.

This Prospectus sets forth concisely the information about
the Company that a prospective investor ought to know before
investing. This Prospectus and the attached Statement of
Additional Information ("SAI") of even date should be retained
for future reference. Additional information about the Company
including the SAI has been filed with the Securities and Exchange
Commission, and additional copies of the SAI are available upon
oral or written request and without charge by writing to the
Company or calling (716) 853-0802. The table of contents of the
Statement of Additional Information appears at page __ below.

The Common Stock is traded in the over-the-counter market
and listed on NASDAQ under the symbol "RAND." On April __, 1997
the last reported bid price for the Common Stock as reported on
the NASDAQ consolidated reporting system was $____ per share.
See "Price Range of Common Stock."

The Common Stock offered hereby involves a high degree of
risk. See "SUMMARY OF THE OFFERING -- Risk Factors."
Historically, the Company's shares have frequently traded at a
discount from net asset value. See "FINANCIAL HIGHLIGHTS."
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Sales Load Proceeds to
Public (1) Company

<S> <C> <C> <C>
Per Share $____ -0- -0-

Total $_________ -0- -0-
</TABLE>

(1) Estimated, based on last reported bid price for the
Company's common stock on April __, 1997.
(2) The expenses of the offering (other than commissions paid by
the Selling Shareholders) are estimated to be $62,000 and
will be borne by the Company.

The date of this Prospectus and attached SAI is April __, 1997.
<PAGE>
No dealer, salesman, or other person has been authorized to
give any information or make any representations, other than
those contained in this Prospectus, and, if given or made, such
other information or representations must not be relied upon as
having been authorized by the Company. This Prospectus does not
constitute an offering in any state in which such offering may
not be lawfully made.

TABLE OF CONTENTS

Page

Fee Table . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Financial Highlights . . . . . . . . . . . . . . . . . . . . . 7
History and Business . . . . . . . . . . . . . . . . . . . . . 8
Plan of Distribution . . . . . . . . . . . . . . . . . . . . 15
Selling Shareholders . . . . . . . . . . . . . . . . . . . . 16
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 18
Management . . . . . . . . . . . . . . . . . . . . . . . . . 18
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 19
Dividend Policies . . . . . . . . . . . . . . . . . . . . . . 21
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . 21
Table of Contents of Statement of Additional Information . . 22

Until May __, 1997 (25 days after the commencement of this
offering), all dealers effecting transactions in the Shares,
whether or not participating in this distribution, may be
required to deliver a Prospectus. This is in addition to the
obligation of dealers to deliver a Prospectus when acting as
underwriters.

Investors are advised to read this Prospectus and to retain it
for future reference.

RAND CAPITAL CORPORATION, 2200 RAND BUILDING, BUFFALO, NY 14203
(716) 853-0802
<PAGE>
FEE TABLE

The following table shows per share expenses of the Company as a
percentage of net asset value per share.

Shareholder Transaction Expenses...................... -0-

Annual Expenses (as a percentage of net assets
attributable to common shares) (1):

Management fees(2)........................ 6.16%

Other Expenses(3) ........................ 3.76%

Total Annual Expenses.................................. 9.92%
________________
(1) Estimated for the current fiscal year based on the average
annual operating expenses of the Company for 1995 and 1996 as a
percentage of net asset value attributable to common shares.

(2) Includes expenses incurred within the Company's own
organization in connection with the research, selection and
supervision of investments. Such expenses have been deemed to
include salaries, employee benefits, director fees, consulting
fees, and travel expenses.

(3) Other expenses include legal, accounting, stockholders and
office expense, occupancy expense, insurance, and other expenses.

The purpose of the above table is to assist the investor in
understanding the various costs and expenses that an investor in
the fund will bear directly or indirectly.

The following Example estimates the aggregate amount of expenses
expected to be incurred by the Company aggregated for the periods
shown. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE
SHOWN.

________________________________________________________________
Example (1) 1 year 3 years 5 years 10 years
_________________________________________________________________
You would pay the
following expenses on
a $1,000 investment
assuming a 5% annual
return: $99 $282 $445 $782
_________________________________________________________________
(1) The example assumes (a) the percentage rates listed under
"Annual Expenses" remain the same each year except for interest
expense on retired debt; (b) reinvestment of all dividends and
distributions at net asset value; and (c) reflect all recurring
and nonrecurring fees including any underwriting discounts and
commissions.

SUMMARY

Except as specifically indicated otherwise, all numbers of Rand
common stock indicated in this prospectus are approximate numbers
resulting from adjustment for a five-for-four stock split on May
26, 1995.

The Issuer. Rand Capital Corporation is a registered investment
company, classified as a diversified, closed-end management
company, which primarily makes venture capital investments in
small, developing, unseasoned companies. Rand commenced
operations in 1969.

The Offering. The Selling Shareholders identified under "Selling
Shareholders" are offering hereby up to 1,791,221 shares (the
"Shares") of the Company's common stock. The Selling
Shareholders will sell the Shares on a delayed or continuous
basis for their own accounts. The exact timing and amount of
such sales will be within the discretion of the respective
Selling Shareholders. See "Plan of Distribution."

Trading. The Company's common stock has traded in the over-the-
counter market since 1971 (NASDAQ symbol: RAND).

Investment Objective and Policies. The Company primarily invests
for long-term capital appreciation, not current income. The
Company typically invests in debt securities of a new or
developing company and concurrently acquires an equity interest
in the form of stock, warrants or options to acquire stock or the
right to convert the debt securities into stock. The debt
securities acquired by the Company must frequently be
subordinated to the issuer's indebtedness to banks and other
institutional lenders and would be considered below investment
grade. When the Company acquires venture securities, they are
not readily marketable and are usually restricted securities as
to which there are substantial restrictions on resale under the
Securities Act of 1933, as amended (the "Securities Act"). See
"HISTORY AND BUSINESS -- Investment Objective and Policies."

Risk Factors. Investment in the Common Stock is speculative and
involves substantial risks. Some of the principal risks are as
follows.

1. High risk, illiquid investments. The Company invests in
securities of new or young, developing companies, which generally
have no record of earnings or success. The debt instruments that
the Company receives when it makes venture investments are
usually subordinated to bank lending and would be considered
below "investment grade." The securities the Company acquires,
when acquired, are not readily marketable and, even if a buyer
can be found, the securities are "restricted securities" under
the Securities Act and the sale of the securities is subject,
therefore, to certain legal restrictions. The Company may invest
100% of its assets in "restricted securities." See "HISTORY AND
BUSINESS -- Investment Objectives and Policies." Since there is
no quoted market price for such securities, such securities must
be valued in good faith by Rand's Board of Directors on some
other basis, and such determination involves the risk that the
securities may not be accurately valued.

2. Losses on Investments. The venture investments that the
Company makes bear a high degree of risk and, during the ten year
period ended December 31, 1996, approximately 15 of the 42
venture investments made by the Company have resulted in total or
very substantial losses. In addition, the Company had operating
losses in 20 of the last 28 years. See "HISTORY AND BUSINESS --
Investment Objective and Policies."

3. No dividends. The Company invests for capital appreciation,
not current income. The Company has never paid a cash dividend.
The Company has made distributions of the shares of venture
companies on two occasions. See "DIVIDEND POLICIES."

4. Subordinated Loans; Need for Follow-On Investments. While
the Company typically acquires both debt and equity securities in
a venture company, the debt securities are usually subordinated
to the venture company's indebtedness to banks. Even if the
venture is successful, the Company may be requested to invest
additional funds at a future date to keep the venture alive or
otherwise protect the Company's investment. There is no
assurance, however, that the Company will have the funds to make
any desirable follow-on investment or that the Company's ability
to make follow-on investments may not be limited by its
diversification policies. See "HISTORY AND BUSINESS --Investment
Objective and policies."

5. Limitations created by policy regarding diversification of
investments. Due to the Company's election to be classified as a
"diversified" investment company, the Company is required to
maintain at least 75% of the value of its total assets in cash
and cash items, government securities, securities of other
investment companies, and other securities for the purposes of
this calculation limited in respect of any one issuer to an
amount not greater than 5% of the value of the total assets of
the Company and to not greater than 10% of the outstanding voting
securities of such issuer. See "HISTORY AND BUSINESS --
Diversification and Concentration of Investments." As of March
31, 1997, the Company's total assets were approximately
$8,767,000. Accordingly, the Company is generally limited to
making investments of $438,350 or less in any one issuer, and the
Company's ability to make follow-on investments in companies in
which its existing investment is approximately $438,350 or more
may be severely limited at any time when its portfolio is
approaching its diversification limits.

6. Tax status. Unlike many investment companies, the Company
has not qualified and may not qualify as a "regulated investment
company" entitled to special tax benefits under Federal tax law.
See the information under "TAX STATUS," in the attached Statement
of Additional Information which is hereby incorporated herein by
reference.

7. Market overhang. The shares which the Selling Shareholders
have indicated their intention to sell into the market from time
to time creates a substantial "market overhang" of 1,821,122
shares, or 31.9% of the Company's outstanding stock, that may be
sold into the market at any time. During the period from April
1, 1996 through April 1, 1997, the average weekly trading volume
of the Company's Common Stock was approximately 50,000 shares (or
approximately 0.9% of the shares currently outstanding). Given
the historically thin trading market in the Company's common
stock, this market overhang may reduce the market price of the
Company's Common Stock and may lead to unusual downside
volatility during the period that the Shares are being sold.

8. Leveraging. The Company may borrow money and leverage its
assets, although it has only done so during its 28 year operating
history (a) pursuant to obligations of its former subsidiary,
Rand SBIC, Inc. to the U.S. Small Business Administration
pursuant to the rules of that agency, and (b) on a fully secured,
short term (less than 60 days) basis to meet immediate cash flow
needs. The use of leverage exaggerates the effect of investment
gains and losses. If the Company's investments failed to return
anticipated interest, dividends or proceeds of sale, the use of
leverage would create the risk that the Company would be unable
to meet its obligations for borrowed money and be forced to
liquidate some assets at distress prices. See "HISTORY AND
BUSINESS -- Investment Objective and Policies."

9. Legal Proceedings -- Significant litigation affecting the
Company. Based on a venture capital investment made by the
Company in 1973, the Company was named as a defendant in an
action to recover response and remediation costs in excess of
$1,000,000 under the Federal Comprehensive Environmental
Response, Cleanup and Liability Act (CERCLA), the New Jersey
Spill Compensation and Control Act and various common law
theories. Although the Company's Motion for Summary Judgement
and dismissal of all claims against it has been granted and the
Company believes that an appeal is unlikely, the Plaintiff's time
for appeal has not yet run. See "LEGAL PROCEEDINGS."

10. No proceeds to the Company, dilutive effect. The securities
offered hereby will be sold for the accounts of the respective
Selling Shareholders, and the Company will not receive any of the
proceeds from such sales. Since the Company will bear expenses
of the offering estimated at $62,000 as a result of the offering
the net asset value of the Company's Common Stock will be reduced
by that amount.
<PAGE>

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
March 31, December 31, December 31, December 31, December 31, December 31,
1997 1996 1995 1994 1993 1992
(unaudited)
_________ ___________ ___________ ___________ ___________ ___________

<S> <C> <C> <C> <C> <C> <C>
Per Share
Operating
Performance

Net Asset $1.53 2.21 3.19 3.07 3.07 2.12
Value -
Beginning

Net (0.03) (0.09) (0.09) (0.07) (0.04) (0.01)
Investment
Income (loss)

Net Realized 0.04 (0.59) (0.89) 0.18 (0.02) 0.96
and
Unrealized
Gains
(Losses)

Total From 0.01 (0.68) (0.98) 0.11 (0.07) 0.95
Investment
Oper.

0.00 0.00 0.00 0.00 0.00 0.00
Distributions
- Net Invest
Inc.

0.00 0.00 0.00 (0.14) 0.00 0.00
Distributions
- Capital
Gains

Returns of 0.00 0.00 0.00 0.00 0.00 0.00
Capital

Total 0.00 0.00 0.00 0.00 0.00 0.00
Distributions

Cumulative 0.00 0.00 0.00 0.00 0.03 0.00
Effect of
Change
in Accounting
Method

Change 0.00 0.00 0.00 0.01 0.00 0.00
Resulting
From
Purchase or
Sale of
Company
Stock

Net Asset 1.51 1.53 2.21 3.19 3.07 3.07
Value - End

Per Share 1.88 1.44 3.50 4 4-3/8 3-5/8
Market Value
(Adjusted) -
End

Total (0.01) (0.31) (0.31) 0.03 (0.02) 0.31
Investment
Return

Ratios/Supple
-mental Data

Net Assets, 1.51 1.53 2.21 3.19 3.07 3.07
End of Period

Ratio of 2.62% 9.75 8.73 6.13% 5.86% 6.66%
Expenses to
Average Net
Assets

Ratio of Net (1.84)% (5.04) (3.48) (2.32)% (1.11)% (0.38)%
Income (loss)
to Average
Net Assets

Portfolio 4.9% 22.50% 14% 5.00% 4.79% 7.72%
Turnover

Number of 5,708,034 4,225,477 4,225,477 4,185,477 3,357,170 3,357,170
Shares
</TABLE>

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS (Con't)
December 31, December 31, December 31, December 31, December 31,
1991 1990 1989 1988 1987
___________ ___________ ___________ ____________ ___________

<S> <C> <C> <C> <C> <C>
Per Share
Operating
Performance

Net Asset Value 2.07 2.53 2.44 2.07 2.13
- Beginning

Net Investment 0.02 (0.04) 0.00 0.00 0.00
Income (loss)

Net Realized 0.06 (0.28) 0.09 0.40 (0.06)
and Unrealized
Gains (Losses)

Total From 0.06 (0.32) 0.09 0.40 (0.06)
Investment
Oper.

0.00 0.00 0.00 0.00 0.00
Distributions -
Net Invest Inc.

0.00 0.00 0.00 0.00 0.00
Distributions -
Capital Gains
Returns of 0.00 0.00 0.00 0.00 0.00
Capital

Total 0.00 (0.14) 0.00 0.00 0.00
Distributions

Cumulative 0.00 0.00 0.00 (0.03) 0.00
Effect of
Change in
Accounting
Method

Change 0.00 0.00 0.00 0.00 0.00
Resulting From
Purchase or
Sale of Company
Stock

Net Asset Value 2.12 2.07 2.53 2.44 2.07
- End

Per Share 1-3/8 1-1/8 1-1/4 1-1/8 1-1/8
Market Value
(Adjusted) -
End

Total 0.03 (0.15) 0.04 0.16 (0.03)
Investment
Return

Ratios/Supple-
mental Data
Net Assets, End 2.13 2.07 2.53 2.44 2.07
of Period

Ratio of 9.34% 8.96% 8.58% 9.88% 10.32%
Expenses to
Average Net
Assets

Ratio of Net .92% (1.89)% 0.00% 0.00% 0.00%
Income (loss)
to Average Net
Assets

Portfolio 36.76% 14.78% 13.82% 7.36% 31.59%
Turnover

Number of 3,357,170 3,357,170 3,357,170 3,357,170 3,357,170
Shares
</TABLE>

NOTES:
(1) Data has been restated to reflect 25% stock distributions in
1992, 1993, 1994 and 1995, and reflects the Company's private
placement in 1997.
(2) The information contained in this Table of Financial
Highlights was obtained from the Company's Annual Report to
Shareholders for each indicated year. The financial highlights
for the years 1996, 1995, 1994, 1993, 1992, 1991, 1990 and 1989
were audited by Deloitte & Touche LLP whose report on such
information for each of the five years in the period ended
December 31, 1996 is included in the Annual Report for each
respective year.
<PAGE>

HISTORY AND BUSINESS

Introduction

Rand Capital Corporation, which was organized as a New
York corporation in February 1969, is a venture capital
investment company having as its principal purpose investment in
small, young and, in some cases, newly-created enterprises which
are principally engaged in the development or exploitation of
inventions, technological improvements, new products and services
not previously generally available. It is registered under the
Investment Company Act of 1940 (the "1940 Act") and is classified
under the 1940 Act as a closed-end, diversified, management
investment company.

The Company has operated under its present name since
1969. During the past five years the Company has not engaged in
any business other than as an investment company.

Investment Objective and Policies

The Company's investment objective is long-term capital
appreciation, primarily through investments in small, developing
companies. Accordingly, it invests its funds principally in
undertakings commonly referred to as "venture capital"
investments, which involve a high degree of risk and which, in
the Company's opinion, have the potential for significant capital
appreciation.

Typically, the Company will invest in unseasoned
companies, and, in some cases, it may assist in the formation of
new companies and may be a substantial shareholder. On occasion,
it may invest in companies which have been operating for a period
of time and have a record of revenues or earnings. Generally,
the portfolio company's capital will be supplied by its founders
on an equity basis, by the Company through a combination of debt
and equity securities and by banks or other institutions as
senior or secured creditors. The bank and institutional lenders
generally require that the Company subordinate its rights as a
creditor to their rights. The venture debt securities that the
Company invests in would be considered to be below investment
grade.

Enterprises selected for investment will ordinarily
have developed or will be developing what the Company considers
new or unusual concepts such as advanced technology or new
products, methods or techniques of production or marketing. In
selecting companies for investment, the Company will consider
quality of management and any operating record; the soundness of
the idea, service or product to be developed or being developed;
the effect of market and economic conditions and governmental
policies on the company and its products; the nature of its
competition; and, if substantial plant and equipment are
necessary to the company's operations, the suitability or cost of
such facilities.

When acquiring debt securities, the Company will
consider the ability of the issuer to service interest and
principal repayment requirements. The economic terms of the
investment are generally a matter of negotiation between the
Company and the venture company; other investors may also
participate in the negotiation. In some cases where the long-
term prospects of the investment appear attractive to the
Company, but continuing development work will preclude payment of
interest in the near-term, the Company will agree to a deferment
of interest payments. The Company frequently defers payment of
principal installments by portfolio companies for periods of up
to three years. However, the Company's own requirements of
current income to meet some or all of its operating expenses will
necessarily act as some restraint upon a repeated selection of
investments which fail to produce current income. In 1996, on
the basis of a re-evaluation made by the Company and its Board of
Directors, a determination was made to place greater emphasis on
making investments that provide a current return.

From time to time, because of a temporary lack of
suitable venture capital opportunities or in order to provide
liquidity to support the Company's operations, the Company may
invest in liquid and current income-type investments consisting
of federal or state government securities and securities issued
by their agencies and instrumentalities that are guaranteed by
them, certificates of deposit, bankers' acceptances, commercial
paper or other short-term securities, high-rated, publicly-traded
corporate debt obligations, first mortgage construction loans
where a commitment has been obtained from a long-term lender to
acquire the permanent first mortgage loan to be placed upon the
completed property, money market funds, or it may retain its
funds in cash. Such investments in liquid and current income-
type investments do not themselves have the potential for
significant capital appreciation called for by the Company's
principal investment strategy.

The Company spends a substantial portion of its
employee's time monitoring its investments and furnishing
advisory services to the companies in its venture capital
investment portfolio. Upon occasion, the Company has received
compensation in cash and in securities of a portfolio company for
advisory services furnished to a portfolio company. Although
such compensation has rarely been significant in the past, the
Company, under appropriate circumstances, will seek to increase
its income from such advisory services in the future. Where the
Company deems it beneficial to have its nominee on the board of
directors of a venture company in which it invests, it may obtain
a commitment by the portfolio company or its shareholders to
effect that result. As of the date of this Prospectus, nominees
of the Company serve on the boards of directors of four of the
companies in which it has venture investments.

Fundamental Policies

The following investment policies of the Company are
fundamental policies and may not be changed without approval of
the lesser of (1) more than 50% of the Company's outstanding
voting securities or (2) 67% or more of the voting securities
present at a meeting of security holders at which a quorum is
present.

1. The Company may invest up to 100% of its assets in
restricted securities.

2. The Company may issue senior securities in the form
of debentures and preferred stock and may borrow money from banks
and other lenders, on an unsecured basis, all within the
limitation of the 1940 Act. However, an order issued by the
Securities and Exchange Commission which permitted Rand to invest
in a small business investment company subsidiary prohibits the
issuance of preferred stock. See "Other Restrictions on
Investment" hereunder and "Capital Stock -- Preferred Stock."

3. The Company will not:

(a) purchase and sell commodities or commodity
contracts;

(b) trade in contracts commonly called puts or
calls or combinations thereof, except that it may acquire
warrants, options or other rights to subscribe to or sell
securities in furtherance of its investment objectives;

(c) underwrite securities of other issuers,
except that it may acquire portfolio securities under
circumstances where, if sold, the Company might be deemed a
statutory underwriter for purposes of the Securities Act of 1933;

(d) purchase any securities of a company if any
of the directors or officers of the Company owns more than 1/2 of
1% and such persons owning more than 1/2 of 1% together own 5% or
more, of the shares of such company.

4. The Company will diversify its investments so as to
maintain its classification as a "diversified company" within the
meaning of the 1940 Act, that is, at least 75% of the value of
its total assets shall be represented by cash and cash items
(including receivables), Government securities, securities of
other investment companies, and other securities for the purposes
of this calculation limited in respect of any one issuer to an
amount not greater in value than 5% of the value of the total
assets of the Company and to not more than 10% of the outstanding
voting securities of such issuer. "Government securities" refers
to any security issued or guaranteed as to principal or interest
by the United States, or by a person controlled or supervised by
and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the
United States; or any certificate of deposit for any of the
foregoing.

5. The Company will not concentrate its investments in
any one industry, that is, it will not invest more than 25% of
its total assets (at values current at the time of the
investment) in any one industry.

6. The Company may invest in real estate development
companies, but it may not directly hold real estate except for
office use or in connection with the orderly liquidation of a
debt or other investment. Holdings in real estate companies and
for office use will not exceed 25% of the value of its total
assets after each such investment.

7. The Company may make loans and purchase debt
securities in furtherance of its investment objectives. The
loans that the Company makes are made in connection with high-
risk, venture capital investments, are usually subordinated to
bank or other institutional loans, and would be considered below
"investment grade." See, "SUMMARY -- Risk Factors --1. High
risk, illiquid investments," above.

The Company does not have any policy directly limiting
the amount of its portfolio turnover. However, high portfolio
turnover is not generally consistent with the Company's
investment objective of long term capital appreciation through
venture capital investments. During the last three full fiscal
years, the aggregate dollar amounts of purchases and sales of
portfolio securities, other than Government securities, were:
1996 -- $5,001,693; 1995 -- $3,889,108 and, 1994 -- $1,228,797.

Insofar as the Company's investment policies would
permit it to invest in a real estate investment company, see
"Other Restrictions on Investment," below.

The Company's policy not to acquire puts or calls,
except rights to acquire or sell securities to further its
investment objectives, has been interpreted by the Company's
management in light of its principal investment strategy to seek
long term-capital appreciation through high risk venture capital
investments in companies having growth potential, but whose
securities are generally not publicly traded. Thus, in the case
of call options, the Company has made loans to portfolio
companies and received debt instruments in face amounts equal to
the amounts loaned together with warrants to purchase common
stock from the portfolio company at prices that would generally
be favorable to the Company if the portfolio company is
successful during the period prior to the expiration date of the
warrant. Frequently, the warrants are exercisable at the option
of the Company by conversion of part or all of the debt
instrument in lieu of additional cash payments. Generally, this
procedure is an alternative to making an investment in the common
or preferred stock of the portfolio company and, accordingly, is
not viewed as creating additional risks but is seen as providing
cash flow through interest payments on the debt instruments while
preserving some ability to cash-out of the investment at maturity
or upon default on the debt instrument in the event that the
portfolio company is not successful within an appropriate time
period. The debt securities thus acquired by the Company must
frequently be subordinated to the issuer's indebtedness to banks
and other institutional lenders and would be considered below
"investment grade."

In the case of put options, the Company occasionally makes
investments in the common stock of a portfolio company while
simultaneously obtaining a put option to sell the stock, at the
Company's option, back to the portfolio company at an amount
equal to its purchase price during a period of time. This
investment format is also viewed as a means of reducing risk as
compared with investing in the portfolio company's common stock
without having such an option.

The term "call option" is frequently used to designate
a short-term contract (generally having a duration of nine months
or less) under which the purchaser of the call option, in return
for payment of the option premium (the option's current market
price), obtains the right to buy a publicly traded security to
which the option relates at a specified exercise price at any
time during the term of the option. The writer of the call
option, who receives the premium, assumes the obligation to
deliver the underlying security against payment of the exercise
price at any time during the term of the option. The term "put
option" is frequently used to designate a similar short-term
contract that gives the purchaser of the option, in return for
the premium paid, the right to sell the underlying publicly
traded security at a specified exercise price at any time during
the term of the option. The writer of the put option receives
the premium and assumes the obligation to buy the underlying
security at the exercise price whenever the option is exercised.
The Company's Board of Directors does not consider the writing of
or trading in these kinds of "put options" or "call options" to
be related to its investment objectives and, accordingly, it
views them as prohibited under its fundamental investment
policies.

Diversification and Concentration of Investments

Two of the Company's fundamental investment policies,
which cannot be changed except with prior shareholder approval,
are to make diversified investments and to avoid concentrating
its investments in any industry. Under the classification of
investment companies provided under Section 5 of the 1940 Act, a
"diversified company" must maintain at least 75% of its total
assets in cash and cash items (including receivables), Government
securities, securities of other investment companies, and other
securities for the purposes of the calculation limited in respect
of any one issuer to an amount not greater in value than 5% of
the value of the total assets of the investment company and to
not more than 10% of the outstanding voting securities of such
issuer, provided that a diversified company does not lose its
status as such based on a subsequent discrepancy between these
requirements and the values of its various investments if any
such discrepancy did not exist immediately after making an
acquisition. As provided in Section 8(b) of the 1940 Act as
interpreted by the Staff of the Securities and Exchange
Commission, a registered investment company must announce any
policy of concentrating its investments in a particular industry
or group of industries, and an investment company avoids
concentrating in any industry or group of industries by avoiding
making any investment in an industry if, immediately after making
the investment, more than 25% of the Company's total assets would
be invested in securities of issuers within the industry.

During 1994 and 1995 certain investments, which were
acquired in accordance with the Company's policies for
diversification of investments and against concentration in one
industry or group of industries, appreciated in value to such an
extent that the Company's portfolio temporarily ceased to be non-
diversified and its investments became concentrated beyond the
amount permitted by the Company's policies. The appreciation of
these investments did not cause the Company to be in violation of
its policies requiring diversification and against concentration
within a single industry, because those policies govern the way
in which new investments may be made, and they do not affect
existing investments whose value has changed.

Presently, the Company's portfolio of investments is
diversified. Nevertheless, if an existing investment were to
subsequently increase in value to an extent that caused the
Company's portfolio to be non-diversified and excessively
concentrated in a single industry, all investments in portfolio
securities would thereafter have to be (a) limited to not more
than 5% of total assets and not more than 10% of voting
securities of the issuer, and (b) made in a different industry.
These limitations could adversely affect the Company's ability to
make investments in a manner that would be judged by management
as being most likely to receive optimum returns.

Although the Company intends to continue to follow its
policies of diversifying its investments and not concentrating
its investments in any one industry, where significant
appreciation in the value of an existing investment causes the
Company's portfolio to no longer be diversified and to be
concentrated to an extent that would not have been permissible
for a new investment, the Company will not liquidate part or all
of the investment solely for the purpose of establishing
diversification and removing the concentration, but will retain
the investment until the Board of Directors determines that it
would be in the best interest of the Company to dispose of the
investment.

Other Restrictions on Investment

In addition to the fundamental policies enumerated
above, statutory requirements affect investment concentration.
Section 12(d) of the 1940 Act prevents the Company from investing
in an unregistered investment company if, immediately after
acquisition of the securities of the other company, the Company
would have more than 5% of its assets invested in the securities
of the other company or the Company would own more than 3% of the
voting securities of the other company.

The Company does not ordinarily expect to acquire a
majority interest in its venture investments. However, it is the
Company's policy that, subject to the limitations created by its
policy on diversification, when the Company believes it necessary
to protect its investment or enhance its investment
opportunities, the Company may acquire up to 100% of the equity
interest in another company.

Recent Private Sale of Common Stock

The Company made a private offering of common stock in
which it sold 1,174,037 on January 16, 1997 and 308,520 shares on
March 3, 1997 to private investors pursuant to the terms of
Subscription Agreements dated as of those dates (collectively,
the "Subscription Agreement"). The Subscription Agreement
contained registration rights provisions whereby the Company
agreed to cause the offer and sale of as many of the shares as
the subscribers should request to be registered under the
Securities Act of 1933 for sale to the public. This Prospectus
has been prepared and filed pursuant to the registration rights
provisions under the Subscription Agreement.

Share Price Data

The Company's common stock is traded in the over-the-
counter market and listed on NASDAQ under the symbol "Rand." The
following table shows the per share net asset value ("NAV"), the
high bid price, the premium or discount (expressed as a
percentage) of the high bid price to per share NAV, the low bid
price, and the premium or discount (expressed as a percentage) of
the low bid price to per share NAV for the Company's common stock
during the two most recent fiscal years and for each full fiscal
quarter since the beginning of the current fiscal year. The bid
prices are over-the-counter market quotations that reflect inter-
dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions. The stock
price bid data and net asset values have been adjusted for stock
distributions including a five-for-four stock distribution to
shareholders of record on May 26, 1995.

<TABLE>
<CAPTION>
High % of Low % of
NAV Bid NAV Bid NAV

<S> <C> <C> <C> <C> <C>
1995:

1st Quarter...... $3.25 $4.20 129% $3.60 111%
2nd Quarter...... $3.30 $5.375 163% $4.50 136%
3rd Quarter...... $3.33 $7.00 210% $5.25 158%
4th Quarter...... $2.21 $6.50 294% $3.00 136%

1996:

1st Quarter...... $2.11 $3.50 166% $1.00 47%
2nd Quarter...... $1.76 $2.25 128% $1.375 99%
3rd Quarter...... $1.66 $2.125 128% $1.50 90%
4th Quarter...... $1.53 $1.688 110% $1.188 78%

1997:

1st Quarter...... $1.51 $2.00 132% $1.438 95%

</TABLE>

Information concerning the Company's allocation of
brokerage, transfer and dividend paying agent, and custodian is
hereby incorporated by reference from information presented under
the heading "ALLOCATION OF BROKERAGE, TRANSFER AGENT, AND
CUSTODIANSHIP" in the attached Statement of Additional
Information.

PLAN OF DISTRIBUTION

The Selling Shareholders may sell shares of Common
Stock in any of the following ways: (i) through dealers; (ii)
through agents; or (iii) directly to one or more purchasers. The
distribution of the Shares by the Selling Shareholders may be
effected from time to time in one or more transactions in the
over-the-counter market or in negotiated transactions at market
prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling
Shareholders may effect such transactions by selling Shares to or
through broker-dealers, including broker-dealers who are market
makers in the Common Stock, and such broker-dealers may receive
compensation in the form of discounts, concessions or commissions
from the Selling Shareholders and/or commissions from purchasers
of Shares for whom they may act as agent. The Selling
Shareholders and any broker-dealer or agents that participate in
the distribution of the Shares by the Selling Shareholders may be
deemed to be underwriters under the Securities Act of 1933, and
any discounts, concessions or commissions received by any such
broker-dealers or agents may be deemed to be underwriting
discounts and commissions under the Securities Act.

SELLING SHAREHOLDERS

The following table sets forth information regarding
(1) the name of each Selling Shareholder, (2) the amount and
percentage of Shares owned by each Selling Shareholder
immediately prior to the commencement of the Offering, (3) the
number of Shares to be offered hereunder by each Selling
Shareholder, and (4) the amount and percentage of Shares expected
to be owned by each Selling Shareholder after the completion of
the Offering. Except for the Shares to be sold by Mr. Newman and
Colmac Holdings Limited, all of the Shares were acquired by the
Selling Shareholders pursuant to the private offering described
under "HISTORY AND BUSINESS -- Recent Private Offering." Except
under the terms of such private offering and as indicated in the
foot notes to the table, no Selling Shareholder has had any
material relationship with the Company during the last three
years.

BEFORE THE OFFERING

SHARES PERCENT OF TO BE SHARES PERCENT OF
NAME OWNED OUTSTANDING SOLD OWNED OUTSTANDING

<S> <C> <C> <C> <C> <C>
Gregory Abbott 48,429 * 48,429 -0- *

The Clatskanie 20,000 * 12,000 8,000 *
Trust,
C. Balbach TTE

The Todd Trust, 20,000 * 20,000 -0- *
C. Balbach TTE

Paul D. Bauer 22,900 * 12,900 10,000 *

Thomas R. 29,835 * 10,000 19,835 *
Beecher, Jr. (1)

Venture 64,516 1.1% 64,516 -0- *
Investment Club

Mark A. Browning 13,000 * 13,000 -0- *

Samuel R. 39,758 * 32,258 7,500 *
Cappiello

Mark Chaplin 10,000 * 10,000 -0- *

Barington Capital 32,258 * 32,258 -0- *
Group, LP

Donald I. Dussing 16,129 * 16,129 -0- *

James R. Endler, 32,258 * 32,258 -0- *
IRA

Michael Farrell 64,516 1.1% 64,516 -0- *

Patricia A. Fors 64,516 1.1% 64,516 -0- *

Richard Garman 50,000 * 50,000 -0- *

Arthur A. Glick 16,129 * 16,129 -0- *

The Deerfield 161,290 2.8% 161,290 -0- *
Corporation

Herbert J. 6,451 * 6,451 -0- *
Heimerl, Jr.

William N. 26,500 * 26,500 -0- *
Hudson, Jr.

Luiz F. Kahl (1) 64,516 1.1% 64,516 -0- *

Allan G. Kenzie 100,000 1.8% 20,000 80,000 1.4%
(2)

Langley H. Kenzie 20,000 * 15,294 4,706 *
(2)

David & Margot 10,000 * 10,000 -0- *
Kenzie (2)

Michael & Joe 10,000 * 10,000 -0- *
Steinitz

Daniel C. Kenzie 10,000 * 10,000 -0- *
(2)

Allen G. Kenzie, 16,000 * 16,000 -0- *
TTE (2)
FBO Langley C.
King

Allan G. Kenzie, 16,000 * 16,000 -0- *
TTE (2)
FBO Connor A.
King

Rachel K. King, 20,000 * 20,000 -0- *
TTE (2)
FBO Mary L.
Kenzie

Mary L. Kenzie, 20,000 * 20,000 -0- *
TTE (2)
FBO Rachel K.
King

Lippes Family, 20,000 * 20,000 -0- *
LLC

Paul E. Locke 5,000 * 5,000 -0- *

Wendelyn M. 2,000 * 2,000 -0- *
Duquette, Trustee
FBO Laura C.
Duquette

Wendelyn M. 2,000 * 2,000 -0- *
Duquette, TTE
FBO Nicole O.
Duquette

Wendelyn M. 2,000 * 2,000 -0- *
Duquette, TTE
FBO Maxwell A.
Duquette

Theodore E. 2,000 * 2,000 -0- *
Marks, II, TTE
FBO Derek R.
Marks

Theodore E. 2,000 * 2,000 -0- *
Marks, II, TTE
FBO Mathew G.
Marks

Theodore E. 2,000 * 2,000 -0- *
Marks, II, TTE
FBO Theodore E.
Marks, III

Heather R. Palmer 6,000 * 6,000 -0- *

Joshua R. Marks 6,000 * 6,000 -0- *

Wendelyn M. 3,000 * 3,000 -0- *
Duquette

Theodore E. 3,000 * 3,000 -0- *
Marks, III

E.W.M. 10,000 * 10,000 -0- *
Investments, Inc.

Donald McClellan 10,000 * 10,000 -0- *

Frank McGuire 32,258 * 32,258 -0- *

Colmac Holdings 400,000 7.0% 100,000 300,000 5.3%
Limited (3)

Reginald B. 500,000 8.8% 500,000 -0- *
Newman, II (1)

Susan M. Nycek 1,340 * 1,340 -0- *
(5)

J.H. Paull, TTE 20,000 * 20,000 -0- *
FBO Melissa S.
Paull

J.H. Paull, TTE 20,000 * 20,000 -0- *
FBO Allison S.
Paull

Robin K. 9,000 * 6,500 2,500 *
Penberthy (4)

Gregory Photiadis 6,451 * 6,451 -0- *

Jayne K. Rand (1) 215,734 3.8% 100 215,634 3.8%

Karl I. Riner 10,000 * 10,000 -0- *

Pierre & 3,225 * 3,225 -0- *
Madeleine Savoie

Gerald C. Saxe 64,516 * 64,516 -0- *

Richard & Jarilyn 6,451 * 6,451 -0- *
Searns (6)

Olympic 20,000 * 20,000 -0- *
Management
Systems

Randy Strauss 6,451 * 6,451 -0- *

James H. Thompson 20,000 * 20,000 -0- *

Joseph N. 3,225 * 3,225 -0- *
Williams

Frederick W. 1,745 * 645 1,100 *
Winter (1)
__________________________________________________
</TABLE>

* Less than 1%.
(1) Director of the Company.
(2) Ross B. Kenzie is Director of the Company. Langley H.
Kenzie is Ross Kenzie's wife; the other persons indicated
are adult members of Ross Kenzie's family who do not share
his household.
(3) Willis S. McLeese, a director of the Company, is the
Chairman and principal owner of Colmac Holdings Limited.
(4) Chief Financial Officer and Secretary of Company.
(5) Office Manager of the Company.
(6) Respectively, the Chief Executive Officer and Executive Vice
President of Key Resource Group, LLC, an entity to which the
Company has, subject to certain conditions, undertaken to
make a $450,000 venture capital investment.

USE OF PROCEEDS

Each of the Selling Shareholders will receive all of
the net proceeds from the sale of the Shares owned by such
shareholder. The Company will not receive any of the net
proceeds from the sale of the Shares.

MANAGEMENT

The business and affairs of the Company are managed
under the direction of its Board of Directors as required by New
York law. The day-to-day operations of the Company are conducted
through its officers.

The President and the Executive Vice President of the
Company, Allen F. Grum and Nora B. Sullivan, are primarily
responsible for the day to day management of the Company's
portfolio. Information concerning the length of time Mr. Grum
and Ms. Sullivan have been primarily responsible for the
Company's portfolio and concerning their business experience is
included in the attached Statement of Additional Information
under the caption "MANAGEMENT," and is hereby incorporated herein
by reference. Information concerning Willis S. McLeese, a
director who is not a resident of the United States, is included
in the attached Statement of Additional Information and is hereby
incorporated herein by reference. Information concerning
brokerage allocation, custodianship of the Company's investment
securities, and the Company's transfer agent is included in the
attached Statement of Additional Information under the caption
"ALLOCATION OF BROKERAGE, TRANSFER AGENT AND CUSTODIANSHIP," and
is hereby incorporated herein by reference.

To the knowledge of the Company, no person: (a)
beneficially owns, either directly or through one or more
controlled companies, more than 25% of the voting securities of
the Company; (b) has acknowledged or asserted that it controls
the Company: or (c) has been adjudged under Section 2(a)(9) of
the Investment Company Act of 1940 to control the Company.

CAPITAL STOCK

Rand is authorized to issue 500,000 shares of a class
of Preferred Stock having a par value of $10 per share and
10,000,000 shares of Common Stock having a par value of $.10 per
share.

As of the date of this Prospectus, 5,708,034 shares of
Common Stock are issued and outstanding. No shares of Preferred
Stock have been issued.

Common Stock

Holders of Common Stock are entitled to dividends and
other distributions when and as declared by the Board of
Directors and to share ratably in assets available for
distribution on liquidation or dissolution of the Company,
subject however to the prior rights of holders of the Preferred
Stock, when issued. Shares of Common Stock have no conversion
rights, are not subject to redemption and have no sinking fund.
There are no restrictions on the purchase by the Company of
Common Stock, except as provided by law. Each share of Common
Stock, voting as a single class, is entitled to one vote for the
election of directors and all other matters requiring shareholder
vote, and these shares have no cumulative voting rights.

All the outstanding shares of Common Stock are validly
issued, fully paid and non-assessable. All shares of Common
Stock to be sold pursuant to the offering contained in this
Prospectus are currently issued and outstanding. Holders of
shares of Common Stock do not have preemptive rights.

Preferred Stock

Subject to the limitations of the 1940 Act and the
terms of an Exemptive Order of the Securities and Exchange
Commission dated November 5, 1975 pursuant to which the Company
was permitted to make investments in a small business investment
company subsidiary (the "Exemptive Order"), the Preferred Stock
may be issued in one or more series from time to time as the
Board of Directors may determine. The Exemptive Order prohibits
issuance of any Preferred Stock, and cannot be amended without
the specific approval of the Commission. If Preferred Stock were
permitted to be issued, the Board of Directors would be
authorized under the Company's Certificate of Incorporation to
fix the number of shares to be included in each series, the
dividend rate, and the designation, relative rights, preferences
and limitations (including the right of conversion into Common
Stock, if any) pertaining to each such series. No such series
shall, however, have a preference or priority over any other
series of Preferred Stock on the distribution of the Company's
assets or with respect to the payment of dividends.

Under the 1940 Act, Preferred Stock cannot be issued or
sold unless immediately after such issuance or sale, the
Preferred Stock shall have an asset coverage of 200%; that is,
the aggregate involuntary liquidation preference of such
Preferred Stock, or the amount to which the Preferred Stock is
entitled on the Company's involuntary liquidation, and the
aggregate amount of senior securities representing indebtedness
may not exceed 50% of the Company's total assets (less all
liabilities and indebtedness not represented by senior
securities) after issuance or sale of such Preferred Stock.
Dividends and other distributions on the shares of Common Stock
would be prohibited unless at the time of declaration or
distribution the Preferred Stock has at least 200% asset coverage
after deducting the amount of the distribution. Preferred Stock
would have priority over any class of stock as to distribution of
assets and payment of dividends, which dividends would be
cumulative.

Tax Status

Information concerning tax matters relating the Company
is hereby incorporated by reference to the information under the
caption "TAX STATUS" in the attached Statement of Additional
Information.
<PAGE>
DIVIDEND POLICIES

The Company generally retains all of its cash for use
in investments and operating expenses. The Company has never
paid a cash dividend on its Common Stock and has no present
intention of paying cash dividends on the Common Stock.

In August of 1977, the Company distributed to its
shareholders from its portfolio 211,190 common shares of
Astronics Corporation, and in July of 1990 the Company
distributed to its shareholders from its portfolio 137,496 common
shares of Research Frontiers, Inc. Shares of the same class as
the shares distributed were publicly traded on the over-the-
counter market prior to distributions. From time to time the
Company may consider distributing other securities in its
portfolio to its shareholders particularly if securities of the
same class are registered under the Securities Exchange Act of
1934 and traded in the public securities markets and if the
distribution will not violate the provisions of the Securities
Act. There is no present intention to make any such
distribution.

From time to time the Company has made distributions of
its common stock to its shareholders in the form of stock splits.
The most recent such distribution was a five-for-four stock split
with a record date of May 26, 1995 that was distributed on June
16, 1995.

The Company has entered into no agreements which
restrict the payment of dividends.

LEGAL PROCEEDINGS

Stearns & Foster Bedding Company.

On March 21, 1994, a lawsuit was brought against a
number of parties, including the Company, in the U.S. District
Court for the District of New Jersey, under the title Stearns &
Foster Bedding Company v. The Franklin Corporation, et al, (Civil
Action No. 94-967 (JCL)). The action sought contribution
pursuant to the federal Comprehensive Environmental Response
Cleanup and Liability Act (CERCLA) and the New Jersey Spill
Compensation and Control Act for response and environmental
remediation costs in excess of $1 million to be incurred in
connection with the clean-up of a property owned from 1976 to
1979 by a company alleged to have been under the control of Rand
through a venture capital investment. In December of 1996, the
Court granted the Company's Motion for Summary Judgment and
dismissed all of the claims against it. Although the Plaintiff
has the right to appeal the dismissal, the Company has been
advised that the Plaintiff has reached a settlement with one of
the other Defendants for its remaining claims and, if the
settlement is consummated, the litigation will be terminated
without right of appeal.
<PAGE>

TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION

The following table of contents identifies the location
of information in the attached Statement of Additional
Information.

CAPTION Page

Portfolio Turnover........................................... 3

Management................................................... 3

Control Persons and Principal Holders of Securities.......... 9

Investment Advisory and Other Services.......................10

Allocation of Brokerage, Transfer Agent and Custodianship....10

Tax Status...................................................11

Financial Statements.........................................12
<PAGE>
PART B

STATEMENT OF ADDITIONAL INFORMATION

RAND CAPITAL CORPORATION
2200 RAND BUILDING
BUFFALO, NEW YORK 14203

Rand Capital Corporation (the "Company" or "Rand") is a
registered investment company, classified as a diversified,
closed-end, management investment company with an investment
objective of long-term capital appreciation through high risk
venture capital investments in companies having growth potential
but whose securities, in most cases, have no public market. This
Statement of Additional Information relating to the Company is
not a prospectus and should be read in conjunction with the
Company's prospectus. A copy of the Company's prospectus can be
obtained from the Company, 2200 Rand Building, Buffalo, New York
14203, telephone number (716) 853-0802.

The date of this Statement of Additional Information
and of the prospectus to which this Statement of Additional
Information relates is April __, 1997.
<PAGE>
TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION

The following table of contents identifies the location of
information in this Statement of Additional Information.

CAPTION Page

Portfolio Turnover........................................... 3

Management................................................... 3

Control Persons and Principal Holders of Securities.......... 9

Investment Advisory and Other Services.......................10

Allocation of Brokerage, Transfer Agent and Custodianship....10

Tax Status...................................................11

Financial Statements.........................................12

<PAGE>
PORTFOLIO TURNOVER

While Rand's investment objective of long term capital
appreciation through venture capital investments leads to
relatively infrequent sales of individual portfolio securities,
the nature of its investments can lead to substantial
fluctuations in "portfolio turnover" (see "Portfolio Turnover" in
the Financial Highlights table of the attached Prospectus)
resulting from dramatic fluctuations in the value of individual
investments among the relatively small number of investments in
the Company's portfolio. During 1995 and 1996, the Company wrote
down and wrote off a number of investments including its
investments in Aria Wireless Systems, Inc. and Bydatel
Corporation, which had constituted a significant portion of its
aggregate portfolio value. During 1996, the Company also made a
determination that it would generally not maintain investments in
entities after their stock became publicly traded, and this
policy resulted in the sale of other investments in 1996 and in
the first quarter of 1997. Generally, the Company's management
believes that once a portfolio company's stock becomes publicly
traded the value of the investment becomes subject to market
fluctuations which may not reflect the intrinsic values which
Rand seeks to identify and pursue in its normal operations.

MANAGEMENT

The following information is given with respect to each
director and officer of the Company.

<TABLE>
<CAPTION>
Positions
Held with Principal Occupation
Name, Age and Address the Company During Past Five Years

Allen F. Grum (39) President, President of the Company
2200 Rand Building Director since January 1996,
Buffalo, New York 14203 Director since April
1996; prior thereto
Senior Vice President of
the Company since June
1, 1995; Executive Vice
President of Hamilton
Financial Corporation
(mortgage bankers) 1994;
Senior Vice President of
Marine Midland Mortgage
Corporation, 1991-1994.
Nora B. Sullivan (39) Executive Executive Vice President
2200 Rand Building Vice of the Company since
Buffalo, New York 14203 President September 1995; Senior
Associate at Barakat &
Chamberlain (financial
and economic consulting
firm) February to July
1995; attended Columbia
Business School from
1993-4, where she
received an MBA in
Finance and
International Business;
prior thereto, General
Counsel to Integrated
Waste Management (solid
waste management
company) 1991-1992.

Robin K. Penberthy (33) Chief Chief Financial Officer
2200 Rand Building Financial and Secretary of the
Buffalo, New York 14203 Officer, Company since January
Secretary 1996; Scholastic
Aptitude Test (SAT)
Instructor for The
Princeton Review during
1995; prior thereto
Administrative Vice
President-Investor
Relations Manager at
Marine Midland Mortgage
Corporation 1993-94;
various officer
positions at Marine
Midland Mortgage
Corporation since prior
to 1992.

*Reginald B. Newman, Chairman of Chairman of the Board of
II (59) Board Directors of the Company
700 Grand Island since April 1996, and a
Boulevard Director since 1987;
Tonawanda, New York President of NOCO Energy
14150 Corporation (petroleum
distributor) since prior
to 1992.

Thomas R. Beecher, Director Director since 1969,
Jr. (61) Chairman of the Board
200 Theater Place August 1991 to April
Buffalo, New York 1996; Attorney;
14202 President of Beecher
Securities Corporation,
(family-owned venture
capital company) since
prior to 1992.

Luiz F. Kahl (60) Director Director since January
6255 Sheridan Drive 1997; President of
Williamsville, NY 14221 Vector Group LC (private
investment company)
since February 1996;
President and Chief
Executive Officer of The
Carborundum Company
(producer of structural
and electronic ceramic
materials) since prior
to 1992; Director of
National Fuel Gas
(utility company) since
1992.

Ross B. Kenzie (65) Director Director since April
369 Franklin Street 1996; Director of
Buffalo, New York 14202 Merchants Insurance
since prior to 1991.
Retired since prior to
1992.

*Willis S. McLeese Director Director since 1986;
45 St. Clair Ave. W. Chairman of Colmac
Suite 902 Holdings Limited
Toronto, Ontario (developer, owner and
operator of co-
generation and
alternative energy
electric power
generating plants),
Toronto, Canada since
prior to 1992.

Jayne K. Rand (36) Director Director since 1989;
One M&T Plaza Vice President of
Buffalo, New York 14203 Manufacturers & Traders
Trust Co. since 1993,
prior thereto Assistant
Vice President of Marine
Midland Bank, N.A. since
prior to 1992.
Frederick W. Winter Director Director since 1996.
(53) Dean of the School of
University of Buffalo Management, University
School of Management of New York at Buffalo
160 Jacobs Management since 1994; prior
Center thereto was Head of the
Buffalo, New York 14260 Department of Business
Administration at the
University of Illinois
since prior to 1992;
Director of Bell Sports,
Inc. (bicycye and
sporting goods
manufacturer) since
prior to 1992; Director
of Alkon Corporation
(manufacturer of
pneumatic parts and
fittings) since 1992.

</TABLE>
Persons designated by an asterisk (*) in the above
table are "interested persons" within the meaning of
Section 2(a)(19) of the Investment Company Act of 1940, as
amended. Mr. Newman and Mr. McLeese are "interested persons"
based upon the percentage ownership of the Company's common stock
that each one owns.

Willis S. McLeese, who is a resident of Ontario,
Canada, has a majority of his assets in the United States through
his ownership of Colmac Holdings Limited which owns 100% of
Colmac Dynamics, Inc., a Delaware corporation. Mr. McLeese has
not authorized an agent in the United States to receive notice of
service of process.

Compensation

The following table sets forth information with respect
to compensation paid or accrued by the Company in fiscal year
1996 to each director of the Company and to each executive
officer or any affiliated person of the Company with aggregate
compensation from the Company in excess of $60,000, and to each
director of the Company. The Company is not part of a fund
complex.

<PAGE>

<TABLE>
<CAPTION>
COMPENSATION TABLE

Pension or
Aggregate Retirement Benefits Estimated
Name of Person, Compensation Accrued as Part of Annual Benefits
Position from Fund Fund Expenses Upon Retirement

<S> <C> <C> <C>
Allen F. Grum $102,405 $2,750(1) $3,701(2)
President, Director

Nora B. Sullivan $87,042 $2,550(1) -0-
Executive Vice
President

Reginald B. Newman II $6,250 -0- -0-
Chairman

Thomas R. Beecher, Jr. $3,750 -0- -0-
Director

Ross B. Kenzie $4,250 -0- -0-
Director

Willis S. McLeese $4,750 -0- -0-
Director

Jayne K. Rand $6,250 -0- -0-
Director

Donald A. Ross $3,750(3) -0- (3)
Director, Consultant

Frederick W. Winter $4,500 -0- -0-
Director
______________________
</TABLE>

(1) Included within the indicated compensation is payment of
Company contributions to the Company's 401(k) Profit Sharing
Plan. To date, an aggregate of $5,300 has been deferred for
payment to Mr. Grum and Ms. Sullivan. Under such plan,
participants may elect to contribute up to 20% of their
compensation on a pre-tax basis by salary reduction. For
eligible employees, the Company may make a discretionary flat
contribution of 1% of compensation and match an eligible
contribution of up to a maximum of five percent (5%). In
addition, the Company may contribute an annual discretionary
amount as determined by the Board of Directors. In 1996, the
Company did not make any discretionary contributions to the
401(k) Plan.

(2) Includes pension benefit payable to the Company's Defined
Benefit Pension Retirement Plan described below. Amounts
indicated do not include any benefits payable pursuant to the
Company's 401(k) Profit Sharing Plan.

(3) See "Consulting and Deferred Compensation Agreements."
below. Mr. Ross' service as a director ended on April 17, 1997.

Consulting and Deferred Compensation Agreements

Effective December 31, 1995, the Company and Donald A.
Ross terminated his employment agreement and entered into a
Consulting Agreement and a Deferred Compensation Agreement.
Under the terms of the Consulting Agreement, Mr. Ross was paid
$10,000 in 1996 for providing part-time consulting services,
assistance in maintaining continuity in business relations during
the transition to new management, and such other services related
to the Company's business operations as the Company may
reasonably request. Such amounts included any amounts payable
for service as a director and on any committee of the Board of
Directors. In addition, Mr. Ross receives: medical insurance
coverage for the duration of his life and that of his wife for
himself, his wife and his dependents, and during the period of
his consulting agreement, the use of a car and up to $1,500 in
annual maintenance fees therefor, and $2,400 annual membership
dues at a business club and reimbursement of business
entertainment expenses of up to $2,000 per year at the club. The
Consulting Agreement ran for the period of 12 months and was
subject to annual review by the Company. This Agreement was not
renewed for 1997. Under the Deferred Compensation Agreement, Mr.
Ross, or his heirs, received deferred payment for services
previously rendered in the amount of $60,000 for 1996, and will
receive $31,000 for each year thereafter until Mr. Ross reaches
age 70.

Defined Benefit Pension Retirement Plan

From 1988 to 1996, the Company maintained a Defined
Benefit Pension Retirement Plan (the "Defined Benefit Plan") for
all full time employees meeting minimum age and service
requirements. At the later of age 65 or the fifth year of
participation, participants are entitled to accrued monthly
pension benefits computed under a final average pay formula equal
to 75% of average monthly compensation, up to a maximum of
$50,000 per year, reduced proportionately for each year of
service less than ten. The non-forfeitable right of an employee
to pension benefits accrues after a three year period of
employment. Benefits are not reduced by social security payments
or by payments from other sources. The Defined Benefit Plan is
funded through Company contributions, and benefits are payable
under one of several payment options including lifetime annuity
and lump sum settlement. Mr. Grum's benefits are not fully
vested. This plan was terminated in September 1996.

Compensation of Directors

During 1996, under the Company's standard compensation
arrangements with directors, each non-employee director receives
an annual fee of $1,000 plus $750 for attendance at each meeting
of the Board of Directors and each meeting of a Committee not
held on the same day as a Board meeting, and the Chairman of the
Board, Mr. Newman, received an annual fee of $2,500 plus $750 for
attendance at Board and Committee meetings.
<PAGE>
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

The following table sets forth the holdings of each
person who owns of record or beneficially five percent or more of
the Company's Common Stock, and by all officers and directors as
a group, as of March 13, 1997.

<TABLE>
<CAPTION>
Amount and Nature Percent of
Name and Address of Ownership (1) Class

More than 5% owners:

<S> <C> <C>
Reginald B. Newman II 500,000 8.8%
700 Grand Island Boulevard
Tonawanda, New York 14150

Willis S. McLeese (2) 400,000 7.0%
45 St. Clair Avenue, West
Suite 902
Toronto, Canada

All Directors and Officers
as a group (11 persons): 1,390,058(3) 24.4%
______________________
</TABLE>

(1) The beneficial ownership information presented is based upon
information furnished by each person or contained in filings
made with the Securities and Exchange Commission. All
amounts of securities listed are owned both of record and
beneficially unless otherwise noted.

(2) Such shares are owned by Colmac Holdings Limited, a
corporation of which Mr. McLeese is the Chairman and
principal owner.

(3) Except as indicated in (2) above and 9,835 shares as to
which members of the group have sole voting and shared
investment control, members of the group have sole voting
and investment power over the shares indicated.

The Company has no investment adviser and is not a
party to any management-related service contracts. The Company
is advised by its officers under the supervision of its Board of
Directors.

Deloitte & Touche LLP independent auditors, with an
office at Suite 250, Key Bank Tower, 50 Fountain Plaza, Buffalo,
New York 14202 acts as independent auditors for the Company. In
such capacity, Deloitte & Touche LLP examines and audits the
accounts of the Company.

ALLOCATION OF BROKERAGE, TRANSFER AGENT AND CUSTODIANSHIP

Brokerage

Because the Company primarily makes venture capital
investments by negotiated transactions involving securities which
are not publicly traded, the Company does not ordinarily pay
brokerage on its purchase of portfolio securities. From time to
time the Company has sought to increase its return on its cash
awaiting venture capital investment by purchasing certificates of
deposit and government or mortgage backed debt securities from
the issuing banks or from dealers in these securities.

The Company has no agreement, understanding or allocation
formula with respect to the placement of brokerage. In selecting
brokers, the Company may give consideration to a broker who has
presented prospective investments to it or has furnished research
or other information to it which has been useful in evaluating an
investment. However, no Company employee is authorized knowingly
to permit any broker to charge the Company a commission exceeding
the lowest commission generally available to it.

Transfer Agent

The Company's transfer agent, registrar and dividend
paying agent is Continental Stock Transfer & Trust Company, 2
Broad Street, New York, New York 10007.

Custodianship

The Company maintains custody of its own portfolio
securities and does not have a third-party custodian. The
Company's portfolio securities are kept in a vault maintained at
a branch office of Marine Midland Bank, N.A. located in the Rand
Building at LaFayette Square, Buffalo, New York 14203.
<PAGE>
TAX STATUS

Subchapter M of the Internal Revenue Code establishes
special tax provisions for a "regulated investment company." The
Company does not now qualify and does not expect to qualify as a
regulated investment company for 1997 and is therefore subject to
regular corporate tax rates. Rand Capital and Rand SBIC file
consolidated tax returns.

The Company may choose to become a regulated investment
company in any year in which it can qualify and such election is
determined to be beneficial to it. There is no assurance that it
will be able to qualify. Once made, an election cannot be
revoked.

If the Company were to qualify and to elect to be a
regulated investment company, it would (i) distribute all of its
net investment income and gains to shareholders and these
distributions would be taxable as ordinary income or capital
gains, (ii) shareholders might be proportionately liable for
taxes on income and gains of the Company, but shareholders not
subject to tax on their income would not be required to pay tax
on amounts distributed to them, and (iii) the Company would
inform shareholders of the amount and nature of the income or
gains. Tax items which are treated differently for alternative
minimum taxation and regular taxation must be apportioned between
a regulated investment company and its shareholders.

In order for the Company to qualify for tax treatment as a
regulated investment company, at least (1) 90% of the Company's
gross income must be derived from dividends, interest, payments
with respect to securities loans, and gains from a sale or other
disposition of stock or securities, and less than 30% of its
gross income may be derived from the sale or distribution of
stock or securities held for less than 3 months, and (2) 50% of
the value of its total assets at the close of each quarter must
be represented by cash and cash equivalent items, government
securities, securities of other regulated investment companies,
and securities of companies of which the Company owns 10% or less
of the outstanding voting securities and the Company must not
invest more than 25% of its assets in any one issuer.

FINANCIAL STATEMENTS

The Statements of Financial Position at December 31, 1995
and December 31, 1996, including the Portfolio of Investments at
December 31, 1996 and the related Statements of Operations
and Changes in Net Assets for each of the years then
ended, and the Schedules of Selected Per Share Data and
Ratios for each of the five years in the period ended
December 31, 1996, together with the report thereon of
Deloitte & Touche LLP dated January 24, 1997 are
contained on pages 3 through 16 of the Rand Capital Corporation
Annual Report for 1996 and are incorporated herein by reference.
<PAGE>
PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

1. Financial Statements:

The following documents are filed as part of this
Registration Statement:

The financial statements and the report of Deloitte &
Touche LLP set forth on pages 3 through 16 of the Rand
Capital Corporation Annual Report for the year ended
December 31, 1996 are incorporated by reference in this
Form N-2.

Schedules other than those listed above are omitted because
of the absence of the conditions under which they are
required or because the information called for is included
in the financial statements or notes thereto.

Page or
2. Exhibits: Reference

(a)(1) -Certificate of Incorporation of (1)
Registrant -- Certificate of incorp-
oration, filed 2/24/69; Certificate
of Amendment, dated 10/27/69; Cert-
ificate of Amendment, dated 11/26/69;
Certificate of Amendment, dated 7/14/92

(a)(2) -Certificate of Incorporation of Registrant *
-- Certificate of Amendment, dated May 4, 1995;
Certificate of Merger of Rand SBIC, Inc.
into Rand Capital Corporation, dated 9/27/94;
Certificate of Amendment, dated 4/25/96; Cert-
-ificate of Amendment, dated 4/17/97

(b) -By-Laws of Registrant *

(d)(1) -Specimen Certificate for Common
Stock of Registrant *

(d)(2) -Form of Subscription Agreement *
among Registrant and holders of
securities being registered

<PAGE>
Page or
Exhibit Reference

(e) -[Not applicable]

(f) -[Not applicable]

(g) -[Not applicable]

(h) -[Not applicable]

(i)(1) -Deferred Compensation Agreement, effective *
December 31, 1995, between the Registrant
and Donald A. Ross

(i)(2) -Registrant's Defined Benefit Pension
Retirement Plan, dated January 1, 1988 (2)

(i)(3) -Registrant's 401(k) Profit Sharing
Prototype Plan (3)

(j) -[Not applicable]

(k) -[Not applicable]

(l) -Opinion and Consent of Hodgson,
Russ, Andrews, Woods & Goodyear LLP *

(m) -Not applicable

(n) -Consent of Independent Auditors *

(o) -Financial Statements (4)

(p) -[Not applicable]

(q) -[Not applicable]

(r) -Financial Data Schedule *

______________
(1) Incorporated by reference to Exhibit 2(a) to Registrant's
Registration Statement No. 33-77824, dated April 15, 1994.
(2) Incorporated by reference to Exhibit 2(i)(2) to Registrant's
Registration Statement No. 33-77824, dated April 15, 1994.
(3) Incorporated by reference to Exhibit 2(i)(3) to Registrant's
Registration Statement No. 33-77824, dated April 15, 1994.
(4) The Statements of Financial Position at December 31, 1995
and December 31, 1996, including the Portfolio
of Investments at December 31, 1996 and the
related Statements of Operations and Changes in
Net Assets for each of the years then ended, and
Schedules of Selected Per Share Data and Ratios for each of
the five years in the period ended December 31, 1996,
together with the report thereon of Deloitte & Touche LLP
dated January 24, 1997 are contained on pages 3 through 16
of the Rand Capital Corporation Annual Report for 1996 as
filed pursuant to Rule 30d-2 and are incorporated herein by
reference.

* Filed herewith.

Item 25. Marketing Arrangements

None

Item 26. Other Expenses of Issuance and Distribution

The following table sets forth the expenses payable in
connection with the issuance and distribution of the securities
being registered. All of the amounts shown are estimates, except
the registration fee. None of such expenses shall be borne by
security holders of the Company.

Registration fee.............................$ 916.09
NASD fee.....................................$ 802.34
Transfer agent's fee........................ $ 180.00

Printing (other than stock certificates).....$ 300.00

Engraving and printing stock certificates....$ 25.00

Expenses of qualification under
"Blue-Sky" Law...............................$ 2,000.00

Accountants' fees and expenses...............$ 7,000.00

Legal fees and expenses......................$50,000.00

Miscellaneous................................$ 776.57

Total...................................$62,000.00
===========

Item 27. Persons Controlled by or under Common Control with
Registrant

Not applicable.

<PAGE>
Item 28. Number of Holders of Securities

As of March 3, 1997, the number of record holders of each
class of outstanding securities of Registrant was as follows:

Number of Record
Title of Class Holders

Common Stock ($.10 par value)...... 755

Item 29. Indemnification

Reference is made to the provisions of Sections 721 to 726
inclusive of the New York Business Corporation Law authorizing
(i) the indemnification of persons who are made parties to an
action by or in the right of the Company by reason of the fact
that they were directors or officers of the Company against the
reasonable expenses, including attorneys' fees, actually and
necessarily incurred by them in connection with their defense of
such action, except in relation to matters as to which they were
adjudged to have breached their duties to the Company, and (ii)
the indemnification of officers and directors in the defense of
other actions against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees
incurred therein, if they acted in good faith for a purpose which
they reasonably believed to be in the best interests of the
Company and, in criminal actions or proceedings, in addition, had
no reasonable cause to believe the conduct was unlawful.

Article VI of the By-laws of Registrant provides:

" SECTION 1. RIGHT OF INDEMNIFICATION. Except to the
extent expressly prohibited by law, the Corporation shall
indemnify any person, made or threatened to be made, a party
in any civil or criminal action or proceeding, including an
action or proceeding by or in the right of the Corporation
to procure a judgment in its favor or by or in the right of
any other corporation of any type or kind, domestic or
foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or
officer of the Corporation served in any capacity at the
request of the Corporation, by reason of the fact that he,
his testator or intestate is or was a director or officer of
the Corporation or serves or served such other corporation,
partnership, joint venture, trust, employee benefit plan or
other enterprise, in any capacity, against judgments, fines,
penalties, amounts paid in settlement and reasonable
expenses, including attorneys' fees, incurred in connection
with such action or proceeding, or any appeal therein,
provided that no such indemnification shall be required with
respect to any settlement unless the Corporation shall have
given its prior approval thereto. Such indemnification
shall include the right to be paid advances of any expenses
incurred by such person in connection with such action, suit
or proceeding, consistent with the provisions of applicable
law. In addition to the foregoing, the Corporation is
authorized to extend rights to indemnification and
advancement of expenses to such persons by (i) resolution of
shareholders; (ii) resolution of directors or (iii) an
agreement, to the extent not expressly prohibited by law.

SECTION 2. AVAILABILITY AND INTERPRETATION. To the
extent permitted under applicable law, the rights of
indemnification and to the advancement of expenses provided
in this Article VI (a) shall be available with respect to
events occurring prior to the adoption of this Article VI,
(b) shall continue to exist after any rescission or
restrictive amendment of this Article VI with respect to
events occurring prior to such rescission or amendment, (c)
shall be interpreted on the basis of applicable law in
effect at the time of the occurrence of the event or events
giving rise to the action or proceeding or, at the sole
discretion of the director or officer or, if applicable, the
testator or intestate of such director or officer seeking
such right, on the basis of applicable law in effect at the
time such rights are claimed and (d) shall be in the nature
of contract rights that may be enforced in any court of
competent jurisdiction as if the Corporation and the
director or officer for whom such rights are sought were
parties to a separate written agreement.

SECTION 3. OTHER RIGHTS. The rights of indemnification
and to the advancement of expenses provided in this Article
VI shall not be deemed exclusive of any other rights to
which any director or officer of the Corporation or other
person may now or hereafter be otherwise entitled whether
contained in the certificate of incorporation, these by-
laws, a resolution of the shareholders, a resolution of the
Board of Directors or an agreement providing for such
indemnification, the creation of such other rights being
hereby expressly authorized. Without limiting the
generality of the foregoing, the rights of indemnification
and to the advancement of expenses provided in this Article
VI shall not be deemed exclusive of any rights, pursuant to
statute or otherwise, of any director of or officer of the
Corporation or other person in any action or proceeding to
have assessed or allowed in his or her favor, against the
Corporation or otherwise, his or her costs and expenses
incurred therein or in connection therewith or any part
thereof.

SECTION 4. SEVERABILITY. If this Article VI or any
part hereof shall be held unenforceable in any respect by a
court of competent jurisdiction, it shall be deemed modified
to the minimum extent necessary to make it enforceable, and
the remainder of this Article VI shall remain fully
enforceable."

Reference is made to Section 402(b) of the New York
Business Corporation Law, which generally provides that the
certificate of incorporation of a New York corporation may set
forth a provision eliminating or limiting the personal liability
of directors of the corporation for damages for any breach of
duty in such capacity, provided that no such provision shall
eliminate or limit the liability of any director if a judgement
or other final adjudication adverse to him establishes that his
acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that he gained in
fact a financial profit or other advantage to which he was not
legally entitled.

Consistent with Section 402(b) of the New York Business
Corporation Law, Paragraph 7 of the Registrant's Certificate of
Incorporation provides:

"7. To the fullest extent now or hereafter permitted
by law, no director of the corporation shall be
personally liable to the corporation its
shareholders for damages for any breach of duty in
such capacity."

Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers
and controlling persons of the Company, pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Company of expenses incurred or paid by a director,
officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.

The Company has obtained an insurance policy from American
Alliance Company that indemnifies (i) the Company for any
obligation incurred as the result of the Company's
indemnification of its directors and officers under the
provisions of the New York Business Corporation Law and the
Company's By-Laws, and (ii) the Company's directors and officers
as permitted under the New York Business Corporation Law and the
Company's By-Laws.

Item 30. Business and Other Connections of Investment Adviser

Not applicable.

Item 31. Location of Accounts and Records

All accounts, books or other documents required to be
maintained under Section 31(a) of the 1940 Act and the Rules
promulgated thereunder are maintained at the office of the
Registrant at 2200 Rand Building, Buffalo, New York 14203.

Item 32. Management Services

Not applicable.

Item 33. Undertakings

1. Registrant hereby undertakes to suspend offering of its
shares until it amends the prospectus contained herein if (1)
subsequent to the effective date of its Registration Statement,
the net asset value declines more than 10% from its net asset
value as of the effective date of the Registration Statement or
(2) the net asset value increases to an amount greater than its
net proceeds as stated in the prospectus contained herein.

2. Not applicable.

3. Not applicable.

4. Registrant hereby undertakes:

(a) to file, during any period in which offers or
sales are being made, a post-effective amendment
to its Registration Statement (1) to include any
prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended, (2) to reflect
in the prospectus any facts or events after the
effective date of its Registration Statement (or
the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent
a fundamental change in the information set forth
in its Registration Statement, and (3) to include
any material information with respect to the plan
of distribution not previously disclosed in its
Registration Statement or any material change to
such information in its Registration Statement;

(b) that, for the purpose of determining any liability
under the Securities Act of 1933, as amended, each
such post-effective amendment shall be deemed to
be a new Registration Statement relating to the
securities offering therein, and the offering of
those securities at that time shall be deemed to
be the initial bona fide offering thereof; and

(c) to remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination
of the offering.

5. Not applicable.

6. Registrant hereby undertakes to send by first-class
mail or other means designed to insure equally prompt delivery,
within two (2) business days of receipt of a written or oral
request, the Statement of Additional Information.
<PAGE>
POWER OF ATTORNEY

We, the undersigned directors and officers of Rand
Capital Corporation and each of us, do hereby constitute and
appoint Allen F. Grum, Nora B. Sullivan and Robin K. Penberthy,
or any of them, our true and lawful attorneys and agents, each
with full power of substitution, to do any and all acts and
things in our name and behalf and in our capacities as directors
and officers to execute any and all instruments for us and in our
names and in our capacities listed below, which attorneys and
agents, or any of them, may deem necessary or advisable to enable
said corporation to comply with the Securities Act of 1933, as
amended, and any rules, regulations and requirements of the
Securities and Exchange Commission, in connection with this
Registration Statement, including specifically, but without
limitation, power and authority to sign for us or any of us in
our names in the capacities indicated below, any and all
amendments (including post-effective amendments) hereto; and we
do hereby ratify and confirm all that said attorneys and agents,
or their substitute or substitutes, or any of them, shall do or
cause to be done by virtue hereof.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, Registrant has duly
caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of
Buffalo, State of New York, on the 17th day of April, 1997.

RAND CAPITAL CORPORATION
(Registrant)

S/Allen F. Grum
By_______________________________
(Allen F. Grum, President)

Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed below by
the following persons in the capacities and on the dates
indicated:

Signature Title Date

Principal Executive Officer:

S/Allen F. Grum President and April 17, 1997
_______________________ Director
(Allen F. Grum)

Principal Financial Officer and
Principal Accounting Officer:

S/Robin K. Penberthy Chief Financial April 17, 1997
_____________________________ Officer
(Robin B. Penberthy)

Directors:

S/Reginald B. Newman II Chairman and April 17, 1997
_____________________________ Director
(Reginald B. Newman II)

S/Thomas R. Beecher, Jr. Director April 17, 1997
______________________________
(Thomas R. Beecher, Jr.)

S/Allen F. Grum Director April 17, 1997
___________________________
(Allen F. Grum)

S/Luiz F. Kahl Director April 17, 1997
____________________________
(Luiz F. Kahl)

S/ Ross B. Kenzie Director April 17, 1997
____________________________
(Ross B. Kenzie)

S/ Willis S. McLeese Director April 17, 1997
______________________________
(Willis S. McLeese)

S/ Jayne K. Rand Director April 17, 1997
_________________________
(Jayne K. Rand)

S/ Frederick W. Winter Director April 17, 1997
______________________________
(Frederick W. Winter)

<PAGE>
EXHIBIT INDEX

Reference or
Sequentially
Exhibit Numbered Page

(a)(2) -Certificate of Incorporation of Registrant *
-- Certificate of Amendment, dated May 4,1995;
Certificate of Merger of Rand SBIC, Inc.
into Rand Capital Corporation, dated 9/27/94;
Certificate of Amendment, dated 4/25/96; Cert-
-ificate of Amendment, dated 4/17/97

(b) -By-Laws of Registrant *

(d)(1) -Specimen Certificate for Common
Stock of Registrant *

(d)(2) -Form of Subscription Agreement *
among Registrant and holders of
securities being registered

(e) -[Not applicable]

(f) -[Not applicable]

(g) -[Not applicable]

(h) -[Not applicable]

(i)(1) -Deferred Compensation Agreement, effective *
December 31, 1995, between the Registrant
and Donald A. Ross

(i)(2) -Registrant's Defined Benefit Pension
Retirement Plan, dated January 1, 1988 (2)

(i)(3) -Registrant's 401(k) Profit Sharing
Prototype Plan (3)

(j) -[Not applicable]

(k) -[Not applicable]

(l) -Opinion and Consent of Hodgson,
Russ, Andrews, Woods & Goodyear LLP *

(m) -Not applicable

(n) -Consent of Independent Auditors *

(o) -Financial Statements (4)

(p) -[Not applicable]

(q) -[Not applicable]

(r) -Financial Data Schedule *

______________
(1) Incorporated by reference to Exhibit 2(a) to Registrant's
Registration Statement No. 33-77824, dated April 15, 1994.
(2) Incorporated by reference to Exhibit 2(i)(2) to Registrant's
Registration Statement No. 33-77824, dated April 15, 1994.
(3) Incorporated by reference to Exhibit 2(i)(3) to Registrant's
Registration Statement No. 33-77824, dated April 15, 1994.
(4) The Statements of Financial Position at December 31, 1995
and December 31, 1996, including the Portfolio
of Investments at December 31, 1996 and the related
Statements of Operations and Changes in Net Assets
for each of the years then ended, and Schedules
of Selected Per Share Data and Ratios for each of
the five years in the period ended December 31, 1996,
together with the report thereon of Deloitte & Touche LLP
dated January 24, 1997 are contained on pages 3 through 16
of the Rand Capital Corporation Annual Report for 1996 as
filed pursuant to Rule 30d-2 and are incorporated herein by
reference.

* Filed herewith.

EXHIBIT 2(a)(2)

Certificate of Incorporation of the Registrant
-- Certificate of Amendment, dated May 4, 1995;
Certificate of Merger of Rand SBIC, Inc. into
Rand Capital Corporation, dated 9/27/94;
Certificate of Amendment, dated 4/25/96;
Certificate of Amendment, dated 4/17/97

<PAGE>

CERTIFICATE OF AMENDMENT

of the

CERTIFICATE OF INCORPORATION
______________________________

Under Section 805 of the
Business Corporation Law
______________________________

Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, Donald A. Ross and Dorothy
Dann, being respectively the President and the Secretary and
Treasurer of Rand Capital Corporation, do hereby certify as
follows:

1. The name of the corporation is RAND CAPITAL
CORPORATION

2. The Certificate of Incorporation of the
corporation was filed by the Department of State
of the State of New York on February 24, 1969.

3. The Certificate of Incorporation is hereby amended
to increase the aggregate number of shares of
Common Stock which the corporation shall have the
authority to issue from 4,400,000, par value $.10
per share, to 7,000,000, par value $.10 per share.
Except for the increase in the number of shares
authorized, the corporation's Common Stock, par
value $.10 per share, will not be affected in any
manner by such amendment. The 500,000 shares of
Preferred Stock, par value, $10.00 per share, that
the corporation is authorized to issue (none of
which have been issued), will not be affected by
such amendment. To effect such amendment,
Paragraph 4(a) of the Certificate of Incorporation
is hereby amended to read in its entirety as
follows:

"4(a). The aggregate number of shares
which the corporation shall have
the authority to issue is SEVEN
MILLION FIVE HUNDRED THOUSAND
(7,500,000) shares, of which FIVE
HUNDRED THOUSAND (500,000) shall be
Preferred Stock, par value $10.00
per share, and SEVEN MILLION
(7,000,000) shall be Common Stock,
par value $.10 per share."

4. The foregoing amendment of the Certificate of
Incorporation was authorized by the affirmative
vote of the Board of Directors of the corporation
followed by the affirmative vote of the holders of
a majority of all outstanding common shares of the
corporation entitled to vote thereon at a meeting
of the shareholders duly called and held on the
4th day of May 1995.

IN WITNESS THEREOF, the undersigned have signed this
Certificate and affirmed the statements made herein as true
under penalties of perjury this 4th day of May, 1995.

s/Donald A. Ross
___________________________________
Donald A. Ross, President

s/Dorothy Dann
__________________________________
Dorothy Dann, Secretary and
Treasurer

<PAGE>

CERTIFICATE OF MERGER

RAND SBIC, INC.

INTO

RAND CAPITAL CORPORATION

_________________________

Under Section 905 of the
Business Corporation Law

The undersigned, Rand Capital Corporation, a New York

corporation, being the holder of all of the outstanding shares of

Rand SBIC, Inc., a New York corporation, does hereby certify:

1. The name of the subsidiary corporation to be

merged is Rand SBIC, Inc. The name of the surviving corporation

is Rand Capital Corporation.

2. The designation and number of outstanding shares

of each class of Rand SBIC, Inc. are 25 shares of Common Stock,

without par value, all of which are owned by Rand Capital

Corporation.

3. The effective date of the merger shall be

September 30, 1994.

4. The certificate of incorporation of Rand SBIC,

Inc. was filed by the Department of State of the State of New

York on February 11, 1975. The certificate of Incorporation of

Rand Capital Corporation was filed by the Department of State of

the State of New York on February 24, 1969.

5. The Plan of Merger was adopted by the Board of

Directors of Rand Capital Corporation, the surviving corporation.

IN WITNESS WHEREOF, the undersigned hereunto sign this

certificate and affirm the statements made herein as true under

the penalties of perjury this 27th day of September 1994.

RAND CAPITAL CORPORATION

By: s/Donald A. Ross
---------------------------
Donald A. Ross, President

By: s/Dorothy Dann
---------------------------
Dorothy Dann, Secretary

<PAGE>

CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
RAND CAPITAL CORPORATION
______________________________

Under Section 805 of the
Business Corporation Law

Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, Allen F. Grum and Robin K.
Penberthy, being respectively the President and the Secretary of
Rand Capital Corporation, do hereby certify as follows:

1. The name of the corporation is RAND CAPITAL
CORPORATION.

2. The Certificate of Incorporation of the corporation was
filed by the Department of State of the State of New
York on February 24, 1969.

3. The Certificate of Incorporation of the corporation is
hereby amended to add a new Paragraph 7 with respect to
elimination of personal liability of the directors of
the corporation. To effect this amendment, Paragraph 7
is hereby added which shall read in its entirety as
follows:

"7. To the fullest extent now or hereafter permitted
by law, no director of the corporation shall be
personally liable to the corporation or its
shareholders for damages for any breach of duty in
such capacity."

4. The foregoing amendment of the Certificate of
Incorporation was authorized by the affirmative vote of
the Board of Directors of the corporation followed by
the affirmative vote of the holders of a majority of
all outstanding common shares of the corporation
entitled to vote thereon at the annual meeting of
shareholders duly called and held on the 25th day of
April 1996.

IN WITNESS THEREOF, the undersigned have signed this
Certificate and affirmed the statements made herein as true
under penalties of perjury this 25th day of April, 1996.

s/Allen F. Grum
----------------------------
Allen F. Grum, President

s/Robin K. Penberthy
-----------------------------
Robin K. Penberthy, Secretary

<PAGE>

CERTIFICATE OF AMENDMENT
of the
CERTIFICATE OF INCORPORATION
of
RAND CAPITAL CORPORATION
___________________________
Under Section 805 of the
Business Corporation Law

Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, Allen F. Grum, and Robin K.
Penberthy, being respectively the President and the Secretary and
Treasurer of Rand Capital Corporation, do hereby certify as
follows:

1. The name of the corporation is RAND CAPITAL
CORPORATION.

2. The Certificate of Incorporation of the corporation was
filed by the Department of state of the State of New
York on February 24, 1969.

3. The Certificate of Incorporation of the corporation is
hereby amended to increase the aggregate number of
shares of Common Stock which the corporation shall have
the authority to issue from 7,000,000, par value $.10
per share, to 10,000,000, par value $.10 per share.
Except for the increase in the number of shares
authorized, the corporation's common stock, par value
$.10 per share, will not be affected in any manner by
such amendment. The 500,000 shares of Preferred Stock,
par value, $10.00 per share, that the corporation is
authorized to issue (none of which have been issued),
will not be affected by such amendment. To effect such
amendment, Paragraph 4 (a) of the Certificate of
Incorporation is hereby amended to read in its entirely
as follows:

"4.(a). The aggregate number of shares which the
corporation shall have the authority to issue
is TEN MILLION FIVE HUNDRED THOUSAND
(10,500,000) shares, of which FIVE HUNDRED
THOUSAND (500,000) shall be Preferred Stock,
par value $10.00 per share, and TEN MILLION
(10,000,000) shall be Common Stock, par value
$.10 per share."

4. The foregoing amendment of the Certificate of
Incorporation was authorized by the affirmative vote of
the Board of Directors of the corporation followed by
the affirmative vote of the holders of a majority of
all outstanding common shares of the corporation
entitled to vote thereon at a meeting of the
shareholders duly called and held on the 17th day of
April 1997.

IN WITNESS THEREOF, the undersigned have signed this Certificate
and affirmed the statements made herein as true under penalties
of perjury this 17th day of April, 1997.

S/Allen F. Grum
__________________________
Allen F. Grum, President

S/Robin K. Penberthy
__________________________
Robin K. Penberthy, Secretary
and Treasurer

EXHIBIT 2(b)

By-laws of the Registrant
<PAGE>
BY-LAWS
OF
RAND CAPITAL CORPORATION

ARTICLE I
SHAREHOLDERS

SECTION 1. ANNUAL MEETING. The annual meeting of the
shareholders for the purpose of electing directors and of
transacting such other business as may properly be brought before
the meeting shall be held on the fourth Tuesday in April of each
year or at such other time within thirty (30) days before or
thirty (30) days after such date as the Chairman or the Board of
Directors by resolution shall determine.

SECTION 2. SPECIAL MEETINGS. Special meetings of the
shareholders may be called by the Chairman, President, the Board
of Directors or the holders of not less than 25% of all the
shares entitled to vote at the meeting.

SECTION 3. NOTICE OF MEETINGS-WAIVER. Not less than ten
(10) or more than fifty (50) days notice of any regular or
special meeting of the shareholders shall be given by the
Secretary either personally or by mail to each shareholder
entitled to vote. Waiver by a shareholder of notice in writing
of a shareholders' meeting, signed by him, whether before or
after the time of the meeting, shall be equivalent to giving of
such notice. Attendance by a shareholder without objection to
the notice, whether in person or by proxy, at a shareholders'
meeting, shall constitute a waiver of notice of the meeting.

SECTION 4. PLACE OF MEETING. Meetings of the shareholders
of the Corporation shall be held at the principal place of
business of the Corporation or at such other place within or
without New York State, as shall be determined by the Chairman of
the Board or of the Board of Directors.

SECTION 5. DETERMINATION OF SHAREHOLDERS OF RECORD FOR
CERTAIN PURPOSES. In order to determine the holders of record of
Corporation's stock who are entitled to notice of meetings, to
vote at a meeting or adjournment thereof, to receive payment of
any dividend, or to make determination of the shareholders of
record for any other purpose, the Board of Directors will fix a
date as the record date for such determination of shareholders.
Such date shall be no more than fifty (50) days prior to the date
of the action which requires such determination, nor, in the case
of a shareholders' meeting, shall it be less than ten (10) days
in advance of such meeting. If no record date is fixed for such
determination of the shareholders, the date on which notice of
the meeting is mailed or on which the resolution of the Board of
Directors declaring a dividend is adopted, as the case may be,
shall be the record date for such determination of the
shareholders. When a determination of shareholders entitled to
vote at any meeting has been made as provided in this Section,
such determination shall apply to any adjournment of such
meeting.

SECTION 6. PROXIES. A shareholder may vote either in
person or by proxy executed in writing by the shareholder, or his
duly authorized attorney in-fact. No proxy shall be valid after
eleven (11) months from the date of its execution, unless
otherwise provided in the proxy.

SECTION 7. QUORUM. The presence in person or by proxy of
holders of the majority of outstanding stock entitled to vote
shall be necessary to constitute a quorum. In case a quorum
shall not be present at any duly called meeting, the majority of
those present may adjourn the meeting from time to time, not
exceeding thirty (30) days at any one time, until a quorum shall
be present and the business of the meeting accomplished, and of
such adjourned meeting, no notice need be given.

ARTICLE II

CAPITAL STOCK

SECTION 1. FORM OF STOCK CERTIFICATES. The stock of the
Corporation shall be represented by certificates, in such form as
the Board of Directors may, from time to time, prescribe, signed
by the President or a Vice President and the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer,
and sealed with the seal of the Corporation. Such seal may be a
facsimile, engraved or printed. Where any such certificate is
signed by a transfer agent or a transfer clerk or by registrar,
the signatures of any such President, Vice President, Secretary,
Assistant Secretary, Treasurer or Assistant Treasurer upon such
certificates may be facsimiles, engraved or printed. In case any
such officer who has signed or whose facsimile signature has been
placed upon such certificate shall have ceased to be such before
such certificate is issued, it may be issued by the Corporation
with the same effect as if such officer has not ceased to be such
at the date of its issue.

SECTION 2. TRANSFERS OF STOCK. Shares of the stock of the
Corporation shall be transferable on the books of the Corporation
by the holder thereof in person or by his duly appointed
authorized attorney, upon the surrender to the Corporation or its
transfer agent of the certificate or certificates for such
shares, duly endorsed for transfer.

SECTION 3. LOST, STOLEN OR DESTROYED STOCK CERTIFICATES.
No certificate for shares of stock of the Corporation shall be
issued in place of any certificate alleged to have been lost,
stolen or destroyed, except upon timely production of such
evidence of the loss, theft or destruction and upon such
indemnification of the Corporation and its agent to such extent
and in such manner as the Board of Directors may from time to
time prescribe.

ARTICLE III

DIRECTORS

SECTION 1. NUMBER. The number of directors constituting
the entire board shall be such number, not less than three, as
shall, from time to time, be designated by resolution of the
Board of Directors subject to the limitations prescribed by law.

SECTION 2. CHAIRMAN OF THE BOARD OF DIRECTORS AND CHAIRMAN
OF THE EXECUTIVE COMMITTEE. The Board of Directors shall elect a
Chairman who shall also serve as Chairman of the Executive
Committee. The Chairman shall preside at all meetings of the
Board of Directors and the Executive Committee.

SECTION 3. ELECTION. Members of the initial Board of
Directors shall hold office until the first annual meeting of
shareholders and until their successors shall have been elected
and qualified. At the first annual meeting of shareholders, and
at each annual meeting thereafter, the shareholders shall elect
directors to hold office until the next succeeding annual
meeting. Each director shall hold office for the term for which
he is elected and until the next succeeding annual meeting. Each
director shall hold office for the term for which he is elected
and until his successor shall be elected and qualified. Any
vacancy occurring in the Board of Directors by reason of death,
resignation, removal (with or without cause) or disqualification
of a director or increase in the number of directors or for any
other reason, may be filled by a majority of the directors
remaining, and such director shall serve until the next annual
meeting of shareholders or until his successor is elected. A
director need not be a shareholder.

SECTION 4. ANNUAL MEETING. Immediately after the annual
meeting of the shareholders at the place such meeting of the
shareholders has been held, the Board of Directors shall meet
each year for the purpose of organization, election of officers,
and consideration or any other business that may be properly
brought before the meeting. No notice of any kind to either old
or new members of the Board of Directors for this annual meeting
shall be necessary. If a quorum of the directors be not present
on the day appointed for the annual meeting, the meeting shall be
adjourned to some convenient day.

SECTION 5. REGULAR MEETINGS. Regular meetings of the Board
Directors shall be held at such time as may from time to time be
fixed by resolution of the Board, and no notice need be given of
regular meetings.

SECTION 6. SPECIAL MEETINGS. Special meetings of the Board
of Directors may be held at any time upon the call of the
Chairman or five (5) members of the Board of Directors and shall
be held upon notice by letter, telegram, cable or radiogram,
delivered for transmission not later than during the third day
immediately preceding the day for the meeting, or by word or
mouth, telephone or radiophone received not later than one day
before such meeting. Notice of any special meeting of the Board
of Directors may be waived in writing signed by the person or
persons entitled to the notice, whether before or after the time
of the meeting.

SECTION 7. QUORUM. A majority of the Board of Directors
shall be necessary to constitute a quorum.

SECTION 8. COMPENSATION. Directors, as such, shall not
receive any stated salary for their services, but by resolution
of the Board of Directors a fixed sum and expenses of attendance,
if any, may be allowed for attendance at each meeting of the
Board. Members of the Executive Committee and other committees
may be allowed like compensation for attending the committee
meetings.

SECTION 9. EXECUTIVE COMMITTEE. The Board of Directors
may, by a vote of a majority of the Board, designate an Executive
Committee, to consist of three (3) or more of the directors, one
of whom shall be the Chairman of the Board and another of whom
shall be the President, if he be a director. No member of the
Executive Committee shall continue to be a member of it after he
ceases to be a director of the Corporation. The Board of
Directors shall have the power at any time to increase or
decrease the number of members of the Executive Committee, to
fill vacancies on it, to remove any member of it, and to change
its functions or terminate its existence. During the intervals
between meetings of the Board of Directors, subject to such
limitations as may be prescribed by resolution of the Board of
Directors, the Executive Committee shall have and may exercise
all the authority of the Board of Directors, including power to
authorize the seal of the Corporation to be affixed to all papers
that may require it, but shall not have the authority to amend
the by-laws of the Corporation or to fill vacancies on the Board
of Directors or in any committee or to fix the compensation of
the directors for serving on the Board or on any committee. All
actions of the Executive Committee shall be reported at the
meeting of the Board of Directors succeeding such action. A
majority of the Executive Committee shall be necessary to
constitute a quorum for the transaction of any of it business.

SECTION 10. OTHER COMMITTEES. The Board of Directors may
in its discretion appoint other committees which shall have such
powers and perform such duties as from time to time may be
prescribed by the board. A majority of the members of any such
committee may determine its action and fix the time and place of
its meetings unless the board shall otherwise provide. The board
shall have the power at any time to change the membership of any
such committee, to fill vacancies, and to discharge any such
committee.

SECTION 11. REMOVAL OF DIRECTORS. Any director may be
removed with or without cause at any time by a vote of the
shareholders holding the majority of the shares of the
Corporation and at any meeting called for that purpose.

SECTION 12. ACTION WITHOUT A MEETING. Any action required
or permitted to be taken by the board or any committee thereof
may be taken without a meeting if all members of the board or the
committee consent in writing to the adoption of a resolution
authorizing the action. The resolution and the written consents
thereto by the members of the board or committee may be executed
simultaneously or in one or more counterparts, each of which
shall be deemed an original and all of which together shall
constitute one and the same instrument. The resolution and the
written consents shall be filed with the minutes of the
proceedings of the board or committee.

SECTION 13. PRESENCE AT MEETING BY TELEPHONE. Members of
the Board of Directors or any committee thereof may participate
in a meeting of such board or committee by means of a conference
telephone or similar communications equipment allowing all
persons participating in the meeting to hear each other at the
same time. Participation in a meeting by such means shall
constitute presence in person at such meeting.

ARTICLE IV

OFFICERS

SECTION 1. ELECTION. The Board of Directors shall elect a
President, Vice President, Secretary, Treasurer and such other
officers as may be required. Such officers shall serve at the
pleasure of the Directors and shall receive compensation to be
determined by the board.

SECTION 2. PRESIDENT. The President shall be the chief
administrative and operating officers of the Corporation. He
shall be responsible for the investment policies and decisions of
the Corporation. He shall hire and supervise activities of and
assign duties to all officers and employees of the Corporation,
other than the Chairman of the Executive Committee and the
Chairman of the Board. He shall report directly to the Board of
Directors acting as a body and to the Executive Committee acting
as a body.

SECTION 3. VICE PRESIDENT. Each Vice President shall have
such powers and perform such duties as the Board of Directors or
the Executive Committee may prescribe or as the President may
delegate to him. At the request of the President, any Vice
President may, in the case of the President's absence or
inability to act, temporarily act in his place. In the case of
the death of the President, or in the case of his absence or
inability to act without having designated a Vice President to
act temporarily in his place, the Vice President or Vice
Presidents to perform the duties of the President shall be
designated by the Board of Directors or the Executive Committee.

SECTION 4. SECRETARY. The Secretary shall keep the records
and minutes of the Corporation, have charge of the certificate
book and in general shall perform all duties customarily
performed by the Secretary of a corporation.

SECTION 5. TREASURER. The Treasurer shall be the financial
officer; shall have charge and custody of and be responsible for,
all funds and deposit of all such funds in the name of the
Corporation in such banks, trust companies or other depositories
as shall be selected by the Board of Directors; and, in general
shall perform all the duties incident to the office of the
Treasurer and such other duties as may be assigned to him by the
Board of Directors or by the President. The Treasurer shall
render to the President and the Board of Directors whenever the
same shall be required, an account of all his transactions as
Treasurer and of the financial condition of the Corporation.

ARTICLE V

SPECIAL CORPORATE ACTS

SECTION 1. EXECUTION OF NEGOTIABLE INSTRUMENTS. All
checks, drafts, notes, bonds, bills of exchange and orders for
the payment of money shall be signed by such officer or officers
or agent or agents as shall be thereunto authorized from time to
time by the Board of Directors.

SECTION 2. EXECUTION OF DEEDS, CONTRACTS, ETC. Subject
always to the specific directions of the Board of Directors, all
deeds and mortgages made by the Corporation and all other written
contracts and agreements to which the corporation shall be a
party shall be executed in its name by the Chairman, President or
one of the Vice Presidents and when requested the Secretary shall
attest to such signatures and affix the corporate seal to the
instruments.

SECTION 3. ENDORSEMENT OF STOCK CERTIFICATE. Subject
always to the specific directions of the Board of Directors, any
share or shares of stock issued by any corporation and owned by
the Corporation may, for sale or transfer, be endorsed in the
name of the Corporation by the Chairman, President or one of the
Vice Presidents and his signature shall be attested to by the
Secretary who shall affix the corporate seal.

SECTION 4. VOTING OF SHARES OWNED BY THE CORPORATION.
Subject always to the specific directions of the Board of
Directors any share or shares of stock issued by any other
corporation and owned or controlled by the Corporation may be
voted at any shareholders' meeting of the other corporation by
the Chairman, President of the Corporation or by any Vice
President. Whenever, in the judgment of the Chairman or in his
absence, the President, it is desirable for the Corporation to
execute a proxy to give a shareholder's consent in respect of any
shares of stock issued by any other corporation and owned or
controlled by the Corporation, the proxy or consent shall be
executed in the name of the Corporation by the Chairman or the
President without necessity of any authorization by the Board of
Directors. Any person or persons designated in the manner above
stated as the proxy or proxies of the Corporation shall have full
right, power and authority to vote the share or shares of stock
issued by the other corporation.

ARTICLE VI

INDEMNIFICATION OF DIRECTORS AND OFFICERS

SECTION 1. RIGHT OF INDEMNIFICATION. Except to the extent
expressly prohibited by law, the Corporation shall indemnify any
person, made or threatened to be made, a party in any civil or
criminal action or proceeding, including an action or proceeding
by or in the right of the Corporation to procure a judgment in
its favor or by or in the right of any other corporation of any
type or kind, domestic or foreign, or any partnership, joint
venture, trust, employee benefit plan or other enterprise, which
any director or officer of the Corporation served in any capacity
at the request of the Corporation, by reason of the fact that he,
his testator or intestate is or was a director or officer of the
Corporation or serves or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise, in any capacity, against judgments, fines, penalties,
amounts paid in settlement and reasonable expenses, including
attorneys' fees, incurred in connection with such action or
proceeding, or any appeal therein, provided that no such
indemnification shall be required with respect to any settlement
unless the Corporation shall have given its prior approval
thereto. Such indemnification shall include the right to be paid
advances of any expenses incurred by such person in connection
with such action, suit or proceeding, consistent with the
provisions of applicable law. In addition to the foregoing, the
Corporation is authorized to extend rights to indemnification and
advancement of expenses to such persons by i) resolution of the
shareholders; ii) resolution of the directors or iii) an
agreement, to the extent not expressly prohibited by law.

SECTION 2. AVAILABILITY AND INTERPRETATION. To the extent
permitted under applicable law, the rights of indemnification and
to the advancement of expenses provided in this Article VI (a)
shall be available with respect to events occurring prior to the
adoption of this Article VI, (b) shall continue to exist after
any rescission or restrictive amendment of this Article VI with
respect to events occurring prior to such rescission or
amendment, (c) shall be interpreted on the basis of applicable
law in effect at the time of the occurrence of the event or
events giving rise to the action or proceeding or, at the sole
discretion of the director or officer or, if applicable, the
testator or intestate of such director or officer seeking such
rights, on the basis of applicable law in effect at the time such
rights are claimed and (d) shall be in the nature of contract
rights that may be enforced in any court of competent
jurisdiction as if the Corporation and the director or officer
for whom such rights are sought were parties to a separate
written agreement.

SECTION 3. OTHER RIGHTS. The rights of indemnification and
to the advancement of expenses provided in this Article VI shall
not be deemed exclusive of any other rights to which any director
or officer of the Corporation or other person may now or
hereafter be otherwise entitled whether contained in the
certificate of incorporation, these by-laws, a resolution of the
shareholders, a resolution of the Board of Directors or an
agreement providing for such indemnification, the creation of
such other rights being hereby expressly authorized. Without
limiting the generality of the foregoing, the rights of
indemnification and to the advancement of expenses provided in
this Article VI shall not be deemed exclusive of any rights,
pursuant to statute or otherwise, of any director or officer of
the Corporation or other person in any action or proceeding to
have assessed or allowed in his or her favor, against the
Corporation or otherwise, his or her costs and expenses incurred
therein or in connection therewith or any part thereof.

SECTION 4. SEVERABILITY. If this Article VI or any part
hereof shall be held unenforceable in any respect by a court of
competent jurisdiction, it shall be deemed modified to the
minimum extent necessary to make it enforceable, and the
remainder of this Article VI shall remain fully enforceable.

ARTICLE VII

SEAL

SECTION 1. The seal of the Corporation shall be in the form
of a circle and shall bear the words "Corporate Seal, New York"
and the name of the Corporation and the year of incorporation.

ARTICLE VIII

AMENDMENTS

These by-laws of the Corporation may be amended, added to or
repealed at any meeting of the shareholders by the vote of the
holders of record of a majority of the outstanding shares of the
Corporation entitled to vote at the meeting, provided that notice
of the proposed change shall have been given in the notice of the
meeting. The by-laws may also be amended, added to or repealed
at any meeting of the Board of Directors by the vote of a
majority of the board, provided that notice of the proposed
change shall have been given in the notice of meeting. However,
any by-laws hereafter duly adopted at a meeting of the
shareholders shall control the action of the Directors except as
therein otherwise provided.

EXHIBIT 2(d)(2)

Form of Subscription Agreement among Registrant
and holders of securities being registered
<PAGE>
RAND CAPITAL CORPORATION

SUBSCRIPTION AGREEMENT

AGREEMENT made as of the __ day of January, 1997 by and
between the person identified on the signature page of this
Agreement, the persons listed on Exhibit 1 who are signatories to
this Agreement (individually, a "Subscriber," and collectively,
the "Subscribers") and Rand Capital Corporation, a New York
corporation having its principal office at 2200 Rand Building,
Buffalo, New York (the "Corporation").

WHEREAS, the Corporation desires to offer up to 2,840,000
shares (the "Shares") of its common stock, par value $.10 per
share (the "Common Stock") pursuant to the terms and conditions
hereinafter provided; and

WHEREAS, the Subscribers individually desire to purchase
Shares from the Corporation under the terms of this Agreement;

NOW, THEREFORE, for and in consideration of the premises and
covenants herein contained, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

1. Purchase and Sale.

(a) Purchase and Sale of Shares. Subject to the terms and
conditions of this Agreement, the undersigned Subscriber hereby
subscribes to purchase the largest number of whole Shares that
may be purchased at the per share Net Asset Value of the
Company's Common Stock, as determined in accordance with Section
6(a) below, for an aggregate purchase price of $_________ at the
Closing described in Section 1(c), and delivers herewith a
certified or official bank check in that amount as payment for
the aggregate purchase price of the Subscriber's Shares.

(b) Maintenance of Purchase Price in a Separate Bank
Account. Immediately after receipt of this Subscription
Agreement and the subscription payment indicated in Section 1(a),
the Corporation shall cause the payment to be deposited with all
other subscription payments received in connection with the
Offering in a separate bank account. The full amount of all such
subscription payments shall be maintained in such account for the
benefit of the respective Subscribers until the earlier of: (i) a
Closing hereunder, in which case it will be disbursed to the
Corporation, or (ii) thirty (30) days after the date first above
written, in which case it shall be returned to by the Corporation
to the Subscriber, without interest or deduction.

(c) Closing. The purchase and sale of the Shares shall
take place at a closing (the "Closing") at the offices of the
Corporation as soon as practicable after the receipt by the
Corporation of Subscription Agreements and subscription payments
for Shares from all of the Subscribers and the fulfillment of the
conditions contained Section 6 of this Agreement. At the Closing
the Corporation shall deliver to each Subscriber a certificate or
certificates representing the number of Shares the Subscriber is
purchasing together with a check for the difference (if any)
between the price of the number of whole Shares purchased by the
Subscriber and the amount tendered pursuant to Section 1(a),
above.

2. Representations and Warranties of the Corporation. The
Corporation hereby represents and warrants to the each of the
Subscribers that:

(a) Incorporation. The Corporation is a corporation duly
organized and validly existing and in good standing under the
laws of New York and has all requisite corporate power and
authority to carry on its business as a closed-end, investment
company registered under the Investment Company Act of 1940.

(b) Authorization. All corporate action on the part of the
Corporation, its officers and directors necessary for the
authorization, execution, delivery and performance of all
obligations of the Corporation under this Agreement and for the
authorization, issuance and delivery of the Shares being sold
hereunder has been or shall be taken prior to the Closing, and
this Agreement, when executed and delivered shall constitute a
binding and enforceable obligation of the Corporation. When the
Acceptance of Subscription provided for herein has been executed
and delivered by the Corporation, it shall constitute a binding
obligation of the Corporation in accordance with its terms.

(c) Validity of Securities. The Shares to be purchased and
sold pursuant to this Agreement, when issued, sold and delivered
in accordance with its terms for the consideration expressed
herein, shall be duly and validly issued, fully paid and non-
assessable.

3. Representations by Subscribers. Each of the undersigned
Subscribers represents and warrants as to such Subscriber,
severally and not jointly, to the Corporation as follows:

(a) The Subscriber is acquiring the Shares for its own
account as principal, for investment and not with a view to
resale or distribution of all or any part of the Shares except in
accordance with and as provided for in this Agreement.

(b) Immediately prior to the purchase:

(i) the Subscriber has such knowledge and experience
in financial and business matters that it is capable of
evaluating the risks and merits of the prospective investment;
and

(ii) the Subscriber is able to bear the economic risk
of the investment (i.e., at the time of investment it could
afford a complete loss without hardship).

(c) The Subscriber has been informed as to, and is familiar
with, the business activities of the Corporation. The respective
Subscriber has been provided with copies of the Corporation's
1995 Annual Report to Shareholders, the Corporation's proxy
statement used in connection with the solicitation of proxies for
its 1996 Annual Meeting of Shareholders, the Corporation's June
30, 1996 Form N-SAR and semi-annual report to shareholders.

(d) The Subscriber has been advised that the Corporation
was made a defendant in an law suit brought by Sealy Corporation
for contribution pursuant to the federal Comprehensive
Environmental Response, Cleanup and Liability Act ("CERCLA") and
the New Jersey Spill Compensation and Control Act (the "N.J.
Spill Act") for remediation costs in excess of $1,000,000 that
will be incurred by Sealy in connection with the clean-up of a
property allegedly owned by Stop-Fire, Inc. during the period
from 1976 to 1979 on which Stop-Fire is alleged to have dumped
paints, solvents and fire extinguisher materials while allegedly
under the control of the Corporation. The Subscriber understands
that while the Corporation's motion to dismiss the causes of
action against it were dismissed on _____________, 1996 pursuant
to a motion made by the Corporation based on the absence of
evidence indicating ownership or control by the Corporation of
Stop-Fire, Inc. sufficient for the imposition of liability under
CERCLA or the N.J. Spill Act, no assurance can be given that the
dismissal will not be appealed, that any such appeal might not be
successful, and, consequently, that the Corporation will have no
liability resulting from this claim or that it will not incur
substantial expenses in defending or settling the action brought
in connection with this claim.

(e) The Subscriber has had an opportunity to ask questions
of, and receive answers from, appropriate representatives of the
Corporation, including the President, concerning the Corporation,
its business, and the terms and conditions of the Offering, and
to obtain such additional information as the Subscriber deems
necessary to verify the accuracy and adequacy of the information
it has obtained. The Subscriber fully understands that this
Offering has not been registered under the Securities Act of 1933
(the "Securities Act") in reliance upon exemptions therefrom,
and, accordingly, to the extent that it is not supplied with
information which would have been contained in a registration
statement filed under the Securities Act it must rely on its own
access to such information.

(f) The Subscriber affirms that the Subscriber is an
"accredited investor" as that term is defined and construed
pursuant to Rule 501 under the Securities Act of 1933 because at
least one of the following statements is true with respect to it
(indicate the appropriate manner of qualification):

(i)___ a natural person whose individual net worth, or
joint net worth with that person's spouse, at the
Closing will exceed $1,000,000;

(ii)___ a natural person who had an individual income
in excess of $200,000 in each of the two most recent
years or joint income with that person's spouse in
excess of $300,000 in each of those years and has a
reasonable expectation of reaching the same income
level in the current year;

(iii)___ a trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring Shares, whose purchase is directed by a
"sophisticated person" as described in Rule
506(b)(2)(ii) under the Act;

(iv)___ an organization described in Section 501(c) of
the Internal Revenue Code, or a corporation,
Massachusetts or similar business trust, or
partnership, not formed for the specific purpose of
acquiring Shares, with total assets in excess of
$5,000,000;

(v)___ an entity in which all of the equity owners are
accredited investors; or

(vi)___ an entity which otherwise qualifies as an
accredited investor (explain circumstances on a
separate exhibit).

(g) The Subscriber affirms that all information that it has
provided to the Corporation either directly or indirectly,
concerning the Subscriber, the Subscriber's financial position
and the Subscriber's knowledge of financial and business matters
is accurate and complete as of the date of this Agreement.

(h) The Subscriber fully understands and agrees that the
Subscriber must bear the economic risk of its investment in the
Shares for an indefinite period of time because, among other
reasons, the Shares have not been registered under the Securities
Act, and, therefore, cannot be sold, pledged, assigned or
otherwise disposed of unless they are subsequently registered
under the Securities Act or, in the opinion of counsel acceptable
to the Corporation, an exemption from such registration is
available.

(i) The Subscriber understands that no federal or state
agency has passed upon the offering of the Shares or made any
finding or determination as to the fairness of the offering the
Shares.

(j) The Subscriber understands that the Corporation is a
closed-end investment company that is registered under the
Investment Company of 1940 (the "ICA"), and the Subscriber
affirms that its purchase of the Shares hereunder will not cause
it or the Corporation to be in violation of the restrictions on
ownership of the Corporations common shares imposed by the ICA,
including, without limitation, the restrictions contained in
Section 12 of the ICA upon ownership of the Corporation's common
shares by unregistered investment companies.

4. Brokers' Fees. The Corporation and each of the
Subscribers represents and agree that the transactions
contemplated by this Agreement have been carried on by the
parties directly and without the intervention of any other person
in such manner as to give rise to any valid claim against either
party for a finder's fee, brokerage commission or other similar
payment.

5. Restriction on Transferability of Shares, Compliance
with Securities Act of 1933.

(a) Restrictions on Transferability. The Shares shall not
be transferable except upon the conditions specified in this
Section 5, which conditions are intended to insure compliance
with the provisions of the Securities Act of 1933 in respect of
the transfer of the Shares.

(b) Certain Definitions. As used in this Section 5, the
following terms shall have the following respective meanings:

"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering
the Securities Act and the Exchange Act.

"Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended, or any successor federal statute, and the
rules and regulations of the Commission thereunder, all as the
same shall be in effect from time to time.

"Securities Act" shall mean the Securities Act of 1933,
as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall
be in effect at the time.

"Registration Stock" shall mean the all of those Shares
designated by any Subscriber pursuant Section 5(d) as includable
in the registration to be made by the Corporation hereunder.

"Registration Expenses" shall mean all expenses
incurred by the Corporation in complying with Subsection 5(d),
including, without limitation, all registration and filing fees,
printing expenses, fees and disbursements of counsel to the
Corporation, the fees and expenses in connection with all
registrations or exemption from registration under state
securities law affecting the transfer of the Registration Stock
("Blue Sky Expenses") in New York, Texas and Arizona and the
expenses of any regular or special audits incident to or required
by any such registrations (and including the compensation of
regular employees of the Corporation involved in such
registration).

"Selling Expenses" shall mean all underwriting
discounts and selling commissions applicable to the sales, and
any state or federal transfer taxes payable with respect to the
sales, of the Registration Stock, all Blue Sky Expenses for any
states other than New York, Texas and Arizona, any state or
federal transfer taxes payable with respect to the sales of
Registration Stock, and all fees and disbursements of counsel for
the Subscribers.

(c) Shares to be Legended. A restrictive legend in
substantially the following form will be imprinted on the
certificates evidencing the Shares and stop transfer orders or
other appropriate instructions to such effect will be maintained
against the transfer of the Shares on the transfer records of the
Corporation or its transfer agent:

"The Shares represented by this Certificate have not
been registered under the Securities Act of 1933 (the
"Act"). The Shares have been acquired for investment
and may not be sold, transferred, pledged or otherwise
disposed of in the absence of an effective Registration
Statement for the Shares under the Act or an opinion of
counsel satisfactory to the issuer that the proposed
disposition of the Shares will not violate Section 5 of
the Act."

The transfer the Shares on the books and records of the
Corporation will only be effected in accordance with such legend.

(d) Required Registration. Each Subscriber has indicated in
the space provided on the signature page to this Agreement the
number of Shares of Registration Stock that the Subscriber
desires to sell from time to time into the market immediately
after the closing of the Offering and that the Subscriber desires
to have included in a registration to be made by the Corporation.
The Corporation shall, as expeditiously as possible after the
closing of the Offering:

(i) prepare and file with the Commission a registration
statement with respect to the Registration Stock, use its best
efforts to cause it to become and remain effective until the
earliest of (i) two years after the Closing, (ii) the expiration
of the holding period for restricted stock under Rule 144(d) (or
any successor rule) of the Commission, or (iii) until all of the
Registration Stock shall have been sold in accordance with such
registration, and pay all Registration Expenses in connection
therewith;

(ii) prepare and file with the Commission such
amendments and supplements to such registration statement and
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to delivery of
prospectuses for the period during which the information
contained in the prospectus would not have to be updated pursuant
to Section 10(a)(3) of the Securities Act; provided, however,
that if at any time during such period of effectiveness the
Company shall request that sellers of Registration Stock
registered pursuant to such registration statement withhold their
Shares of Registration Stock from sale because of the
Corporation's temporary inability to furnish such sellers with a
prospectus meeting the requirements of the Securities Act (other
than as a result of the application of Section 10(a)(3) of the
Securities Act), such sellers shall refrain from selling such
Registration Stock on the condition that the Corporation shall
file such amendments and supplements to such registration
statement and prospectus issued in connection therewith as may be
necessary in order to permit the sale of the Registration Stock
to the public in compliance with the Securities Act as
expeditiously as reasonably possible;

(iii) furnish to each seller such number of copies of a
prospectus in conformity with the requirements of the Securities
Act, and such other documents, as such seller may reasonably
request in order to facilitate the public sale or other
disposition of the Registration Stock owned by the seller; and

(iv) use its best efforts to register or qualify the
Registration Stock covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as
each such seller shall reasonably request (not exceeding five in
number unless otherwise agreed by the Corporation) as shall be
reasonably appropriate for the distribution of the Registration
Stock covered by such registration statement, provided that the
Corporation shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdiction,
and do any and all other acts and things which may be necessary
or desirable to enable such seller to consummate the public sale
or other disposition of the Registration Stock in such
jurisdictions;

(e) Indemnification by the Corporation. In the event of
any registration of any Registration Stock under the Securities
Act, the Corporation shall, and hereby does, indemnify and hold
harmless in the case of any registration statement filed pursuant
to Section 5, each Subscriber, its directors and officers, each
other person who participates as an underwriter in the offering
or sale of Registration Shares and each other person, if any, who
controls such seller or any such underwriter within the meaning
of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which the Subscriber
or any such director or officer or underwriter or controlling
person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact
contained in any registration statement under which the
Registration Stock was registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not
misleading, and the Corporation shall reimburse the Subscriber,
and each such director, officer, underwriter and controlling
person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss,
claim, liability, action or proceeding; provided that the
Corporation shall not be liable in any such case to the extent
that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is
based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary
prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Corporation
by or on behalf of the Subscriber or such underwriter, as the
case may be, specifically stating that it is for use in the
preparation thereof; and provided further that the Corporation
shall not be liable to any Person who participates as an
underwriter in the offering or sale of Registration Stock or any
other Person, if any, who controls such underwriter within the
meaning of the Securities Act, in any such case to the extent
that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such
Persons' failure to send or give a copy of the final prospectus,
as the same may be then supplemented or amended, to the person
asserting an untrue statement or alleged untrue statement or
omission or alleged omission at or prior to the written
confirmation of the sale of Registration Stock to such person if
such statement or omission was corrected in such final
prospectus.

(f) Indemnification by the Subscriber. In the event of any
registration of Registration Stock under Section 5(d), each
Subscriber shall, and hereby does indemnify and hold harmless (in
the same manner and to the same extent as set forth in Section
5(e)) the Corporation, each director of the Corporation, each
officer of the Corporation and each other person, if any, who
controls the Corporation within the meaning of Section 15 of the
Securities Act, with respect to any statement or alleged
statement in or omission or alleged omission from such
registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged
statement or omission or alleged omission was made in reliance
upon and in conformity with written information about the
Subscriber furnished to the Corporation by the Subscriber for use
in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement.

(g) Cooperation, Furnishing of Information. It shall be a
condition precedent to the obligation of the Corporation to take
any action pursuant to Section 5(d) that each of the Subscribers
shall furnish to the Corporation promptly in writing such
information regarding of the Subscriber, the Shares held by the
Subscriber, and the intended method of disposition of the
Registration Stock as the Corporation shall reasonably request
and as shall be required in connection with the registrations to
be undertaken by the Corporation.

6. Conditions to Acceptance of Subscription and
Closing. The Acceptance of the Subscription provided for herein
is subject to the following conditions:

(a) Net Asset Value. Pursuant to the requirements of the
ICA, the Board of Directors of the Corporation (the "Board") must
determine that the sale price of the Shares is not less than the
current net asset value of the Corporation's common shares as of
a date within 48 hours (excluding Sundays and holidays) of the
determination. Accordingly, unless the Board, in its discretion,
determines that the sale price per share (which shall be Net
Asset Value as determined by the Board) is equal to the current
net asset value of the Corporation's common shares within 48
hours of the Closing, the subscriptions of the Subscribers will
not be accepted, and the payments made by the Subscribers will be
returned to them without interest or deduction as promptly as
possible.

(b) Commitment to Registration. The Subscribers are
concerned that the Corporation be strongly committed to the
registration of the Registration Stock pursuant to Section 5(d)
as promptly as possible after the Closing. Accordingly, the
Board shall adopt the following resolution prior to their
acceptance of the subscriptions of the Subscribers:

"RESOLVED, that the corporation shall use its best
efforts to cause the Registration Stock (as that term
is defined in a Subscription Agreement, dated ________
__, 1996, between the corporation and the subscribers
named therein for 2,840,000 common shares of the
corporation (the "Agreement")) to be registered in
accordance with the Agreement, that the officers of the
corporation are directed pursue such registration as
promptly and diligently as possible on behalf of the
corporation, and that this resolution may not be
altered, amended or repealed by the Directors of this
corporation without their affirmative vote or written
consent based on their good faith determination that to
do so would be in the best interest of the corporation
and its shareholders.

If the Board determines that it will not adopt the foregoing
resolution prior to the Closing, the Board will not accept the
subscriptions of the Subscribers, and the subscription payments
of the Subscribers shall be returned to the Subscribers without
interest or deduction as promptly as possible.

7. Miscellaneous.

(a) Applicable Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New
York.

(b) State in which Offered. The Shares are offered to and
will be purchased by the Subscriber in the State of New York,
unless a different State for such offering and sale is indicated
in the following space: __________ .

(c) Binding Effect. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of
the parties and their successors, legal representatives and
assigns.

(d) No Assignments. The Subscriber agrees that except as
provided herein neither it nor its legal representatives will
sell, assign, encumber or transfer, in any manner whatsoever,
this Agreement or its rights under this Agreement.

(e) Entire Agreement. This Agreement constitutes the
entire agreement between the parties pertaining to the subject
matter hereof and supersedes any prior understandings, oral or
written.

(f) Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given
upon personal delivery or three (3) days after deposit in the
United States Post Office, by registered or certified mail,
addressed to a party at its address hereinafter shown below or at
such other address as such party may designate by ten (10) days
advance written notice to the other party.

(g) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the day and year first above written.

The Corporation:

RAND CAPITAL CORPORATION

By:_________________________
Allen F. Grum, President

The Subscriber:

Name of Subscriber (print):___________________

Aggregate purchase price:$__________________

Number of Shares designated by Subscriber
as Registration Stock:____________________

Address of Subscriber:________________________

_________________________

Signature of Subscriber:________________________

To be completed by the Corporation:

Number of whole Shares to be to be purchased by
Subscriber:_______________

Amount of refund to Subscriber based upon
difference amount tendered and aggregate cost of
whole Shares to be purchased: _____________

ACCEPTANCE OF SUBSCRIPTION

Dated: ___________, 1997

The foregoing Subscription is hereby accepted by Rand
Capital Corporation as of the ____ day of ____________, 1997

RAND CAPITAL CORPORATION

By:______________________
Allen F. Grum, President
<PAGE>
Exhibit 1.

LIST OF SUBSCRIBERS

Name Address No. of Shares

EXHIBIT 2(1)

Opinion and Consent of
Hodgson, Russ, Andrews, Woods & Goodyear, LLP
<PAGE>
HODGSON, RUSS, ANDREWS, WOODS & GOODYEAR, LLP
1800 One M&T Plaza
Buffalo, New York 14203
(716) 856-4000
Fax: (716) 849-0349

April 22, 1997

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549

Ladies/Gentlemen:

Re: Rand Capital Corporation -- Registration Statement
on Form N-2

We are acting as special counsel to Rand Capital
Corporation, Inc., a New York corporation (the "Company") in
connection with the registration under the Securities Act of
1933, as amended (the "Act") and the Rules and Regulations
thereunder (the "Rules") of 1,791,122 shares of the Company's
Common Stock, par value $.10 per share (the "Shares") for sale by
the selling shareholders as set forth in the prospectus (the
"Prospectus") forming a part of the above captioned registration
statement (the "Registration Statement"). This letter is being
delivered to you at the request of the Company.

This letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord of the ABA Section of
Business Law (1991) (the "Accord"). As a consequence, this
letter is subject to a number of qualifications, exceptions,
definitions, limitations on coverage and other limitations, all
as more particularly described in the Accord, and this letter is
to be read in conjunction with the Accord.

In this letter, any capitalized term not defined in
this letter but defined in the Accord has the meaning given it in
the Accord. The law covered by the opinions expressed in this
letter is limited to the Law of the State of New York.

The opinion set forth in this letter is subject to the
following qualifications. Such opinion is based upon (1) our
review of (a) originals, or copies authenticated to our
satisfaction, of the Company's Certificate of Incorporation, as
amended, its by-laws, as amended, and records of certain of its
corporate proceedings, (b) a specimen of the common share
certificate (the "Certificate") to be used for the Shares and (c)
such other certificates, opinions and instruments we have deemed
necessary and (2) such review of published sources of law as we
have deemed necessary. We have assumed that when the Shares are
sold appropriate certificates in the form of the Certificate
evidencing the Shares will be properly executed.

Based upon the foregoing, it is our opinion that the
Shares have been duly authorized, and assuming no change occurs
in the applicable law or pertinent facts, when the Shares are
sold or otherwise transferred by the Selling Shareholders as
provided in the Prospectus, the Shares will be legally issued,
fully paid and non-assessable.

We hereby consent to the filing of this opinion as
Exhibit (l) to the Registration Statement.

Very truly yours,

HODGSON, RUSS, ANDREWS, WOODS & GOODYEAR, LLP

By: S/Ward B. Hinkle
______________________________
Ward B. Hinkle

/mau

EXHIBIT 2(n)
Consent of Independent Auditors
<PAGE>
DELOITTE & _____________________________________________
TOUCHE LLP Suite 250 Telephone: (716)843-7200
Key Bank Tower Facsimile:(716)856-7760
50 Fountain Plaza
Buffalo, New York 14202

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Rand Capital Corporation

We consent to the incorporation by reference in this Registration
Statement of Rand Capital Corporation on Form N-2 of our report
dated January 24, 1997, appearing in and incorporated by
reference in the Annual Report of Rand Capital Corporation for
the year ended December 31, 1996 and to the references to us
under the heading "Financial Highlights" appearing in the
Prospectus, which is a part of such Registration Statement, and
"Financial Statements" appearing in the Statement of Additional
Information, which also is a part of such Registration Statement.

s/Deloitte & Touche LLP
April 17, 1997

EXHIBIT 2(i)(1)

Deferred Compensation Agreement, effective 12/31/95
between the Registrant and Donald A. Ross
<PAGE>
DEFERRED COMPENSATION AGREEMENT

THIS DEFERRED COMPENSATION AGREEMENT (the "Agreement")
is made as of this 31st day of December, 1995 by and between RAND
CAPITAL CORPORATION, a New York corporation with its principal
place of business at 1300 Rand Building, Buffalo, New York,
14203, and DONALD A. ROSS, residing at 240 Woodbridge Avenue,
Buffalo, New York 14214.

BACKGROUND

Donald A. Ross ("Ross") is currently serving as
President and Chief Executive Officer of Rand Capital Corporation
("Rand" or the "Company") . Ross desires to retire as President
and Chief Executive officer effective as of December 31, 1995.
In recognition of Ross' contribution to the success of Rand, Rand
desires to provide Ross with additional compensation and benefits
upon his retirement.

TERMS

NOW, THEREFORE, in consideration of the foregoing and
of the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, the parties agree as
follows:

1. DEFERRED COMPENSATION.

Ross and the Company agree that for and in
consideration of certain services previously provided to the
Company, Rand shall pay a deferred compensation benefit to Ross
in the amount of Sixty Thousand and 00/100 Dollars ($60,000.00)
for the calendar year commencing January 1, 1996 and in the total
amount of Thirty-One Thousand and 00/100 Dollars ($31,000.00) for
each year thereafter until Ross reaches the age of 70. There
shall be no provision for any adjustment upwards by the annual
percentage increase in the Bureau of Labor Statistics-Consumer
Price Index for All Urban Consumers (CPI-U) or any other
comparable Index published by the Bureau of Labor Statistics or
other third party.

1.1 Method of Payment.

Ross shall be paid in equal monthly installments of
Five Thousand and 00/100 ($5,000.00) commencing January 31, 1996
through December 31, 1996, and commencing January 31, 1997 and on
the last day of each month thereafter in the amount of Two
Thousand Five Hundred Eighty-Three and 33/100 Dollars ($2,583.33)
with the final payment to be made on September 30, 1999.

2. FUNDING.

Rand shall have the option of funding this deferred
compensation payment through the purchase of insurance. Any
insurance policy or other asset acquired by Rand for the purpose
of funding this deferred compensation arrangement shall not be
deemed to be held in trust for the benefit of Ross or to be
collateral security for the performance of the obligations of
Rand, but shall remain a general, unpledged, and unrestricted
asset of Rand. The rights of Ross or any beneficiary of Ross
shall be those of an unsecured creditor.

3. DEATH BENEFIT.

If Ross dies during the term of this Agreement, but
before the payments have been made, the remaining payments shall
be paid monthly to a beneficiary selected by Ross. Such
beneficiary shall be selected in writing on a form approved by
Rand. If no beneficiary is selected, the remaining payment shall
be made to Ross' estate.

4. MEDICAL INSURANCE COVERAGE.

Notwithstanding anything contained to the contrary
herein, the Company shall provide Ross and his wife, or the
survivor thereof, for life, with medical insurance coverage at
least comparable to that now carried by the Company for the
benefit of Ross, his wife and his dependents, if any, as of the
date hereof, or, alternatively, pay the cost of a converted
policy for Ross and his wife; provided, however, that if such
coverage is not obtainable, the Company shall at least annually
pay to Ross, or his wife if he is not surviving, an amount equal
to the cost from time to time of providing medical coverage for a
full-time executive of the Company and his wife comparable to
that then carried by the Company for Ross and his wife
immediately prior to his retirement. However, the level of
medical insurance coverage may be adjusted to account for Ross;
or his wife's, eligibility for benefits under Medicare.

5. MISCELLANEOUS.

5.1 Entire Agreement, Amendments.

This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter
hereof and supersedes any and all prior agreements,
understandings and arrangements between the parties relating to
the subject matter hereof. No amendments, change, modification
or alteration of the terms and conditions hereof shall be binding
unless evidenced by a writing signed by all of the parties
hereto.

5.2 Waiver.

The failure of any party to this Agreement to exercise
or enforce any right conferred upon it hereunder shall not be
deemed to be a waiver of any such right nor operate to bar the
exercise or performance thereof at any time or times thereafter,
nor shall a waiver of any right hereunder at any given time,
including, but not limited to, rights to any payments, be deemed
a waiver thereof for any other time.

5.3 Severability.

If any provision of this Agreement is held to be
illegal, invalid or unenforceable by a court of competent
jurisdiction, the parties shall, if possible, agree on a legal,
valid and enforceable substitute provision which is as similar in
effect to the deleted provision as possible. The remaining
portion of the Agreement not declared illegal, invalid or
unenforceable shall, in any event, remain valid and effective for
the term remaining.

5.4 Assignment.

Neither party may assign any of its rights or delegate
any of its obligations hereunder without prior written consent of
the other. Subject to the foregoing, this Agreement inures to
the benefit of, and is binding upon, the successors and permitted
assigns of the parties hereto.

5.5 Notice.

All notices hereunder and designation of beneficiary,
shall be in writing, personally delivered or sent by certified
mail, return receipt requested, postage prepaid addressed to the
other party as follows:

If to Rand: Mr. Allen F. Grum
Rand Capital Corporation
1300 Rand Building
Buffalo, New York 14203

With a copy to: Ann E. Evanko, Esq. and
Robert P. Fine, Esq.
Hurwitz & Fine, P.C.
1300 Liberty Building
Buffalo, New York 14202-3670

If to Ross: Mr. Donald A. Ross
240 Woodbridge Avenue
Buffalo, New York 14214

With a copy to: Richard E. Heath, Esq. and
Richard W. Kaiser, Esq.
Hodgson, Russ, Andrews, Woods
Goodyear, LLP
1800 One M & T Plaza
Buffalo, New York 14203-2391

Either party may change its address to which notices shall be
sent by a notice sent in accordance with this selection.
Election rights or designation of beneficiary notices shall be
effective upon the Company's receipt of such notice or election.

5.6 Execution in Counterpart.

This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.

5.7 Capitalized Terms; Descriptive Headings;
Interpretation.

Capitalized terms used in this Agreement shall have the
meanings given to them in the this Agreement. The recitals set
forth above are material to this Agreement and incorporated
herein by reference. The descriptive headings in this Agreement
are inserted for convenience of reference only, and are not
intended to be part of or affect the meaning or the
interpretation of this Agreement. The use of the word
"including" in this Agreement shall be by way of example rather
than by limitation.

5.8 Payment of Costs and Expenses. In the event Ross
and the Company shall disagree as to their respective rights and
obligations under this Agreement, and Ross or the Company is
successful in establishing, privately or otherwise, that his or
its position is substantially correct, or that Ross' or the
Company's position is substantially wrong or unreasonable, or in
the event that the disagreement is resolved by settlement, Ross
or the Company shall pay all costs and expenses, including
counsel fees, which the prevailing party incur in connection
therewith.

5.9 Governing Law.

This Agreement and the rights and obligations of the
parties hereunder shall in all respects be governed by the laws
of the State of New York, without giving effect to the conflicts
of law or choice of law provisions thereof.

IN WITNESS WHEREOF, the parties have executed this
Deferred Compensation Agreement as of the date first above
written.

RAND CAPITAL CORPORATION

By: s/Thomas R. Beecher
____________________________
Thomas R. Beecher

By: s/Donald A. Ross
______________________________
Donald A. Ross

EXHIBIT (d)(1)
Specimen Certificate for Common Stock of the Registrant
<PAGE>
[FRONT]
[ENGRAVED BORDER]

[RAND LOGO]

Number - RC00000 Shares -
_______

RAND CAPITAL CORPORATION
INCORPORATED UNDER THE LAWS OF THE STATE OF NEW YORK

See Reverse for
Certain Definitions

NASDAQ: RAND COMMON STOCK CUSIP 752185
10 8

THIS CERTIFIES THAT:

is the owner of

FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK
OF $.10 PAR VALUE EACH OF

RAND CAPITAL CORPORATION

transferable on the books of the Corporation in person or by
attorney upon surrender of this certificate duly endorsed or
assigned. This certificate and the shares represented hereby are
subject to the laws of the State of New York, and to the
Certificate of Incorporation and Bylaws of the Corporation, as
now or hereafter amended. This certificate is not valid until
countersigned by the Transfer Agent.

WITNESS the facsimile seal of the Corporation and the
facsimile signatures of its duly authorized officers.

DATED: COUNTERSIGNED:

CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
JERSEY CITY, NJ
TRANSFER AGENT

000001415 By:
Authorized Officer

---------------------------- -----------------------------
Robin K. Penberthy Allen F. Grum
Secretary President

RAND CAPITAL CORPORATION
CORPORATE
SEAL
1969
NEW YORK
<PAGE>
[BACK]
The following abbreviations, when used in the inscription on
the fact of this certificate, shall be construed as though they
were written out in full according to applicable laws or
regulations:

TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common

UNIF GIFT MIN ACT - __________Custodian__________
(Cust) (Minor)
under Uniform Gifts to Minors

Act__________________________
(State)

Additional abbreviations may also be used
though not in the above list.

For Value Received, _____ hereby sell, assign and transfer unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE

_______________________________

_________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS,
INCLUDING ZIP CODE , OF ASSIGNEE)

_________________________________________________________________

__________________________________________________________Shares
of the stock represented by the within Certificate, and do
hereby irrevocably constitute and appoint

_______________________________________________________Attorney
to transfer the said stock on the bonds of the within names
Corporation with full power of substitution in the premises.

Dated__________________________

______________________________________________
NOTICE: THE SIGNATURE TO THIS
ASSIGNMENT MUST CORRESPOND WITH THE NAME
AS WRITTEN UPON THE FACE OF THE
CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATSOEVER.

THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST
CORRESPOND TO THE NAME AS WRITTEN UPON THE FACE OF THIS
CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR
ENLARGEMENT OR ANY CHANGE WHATSOEVER, AND MUST BE GUARANTEED BY A
COMMERCIAL BANK OR TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL
OR REGIONAL OR OTHER RECOGNIZED STOCK EXCHANGE IN CONFORMANCE
WITH A SIGNATURE GUARANTEE MEDALLION PROGRAM.
-----------------------------------------------------------------

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