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14
Lafayette Square, Suite 1405

Buffalo,
NY 14203

(716)
853-0802

November
21, 2023

VIA
EDGAR

Mr.
Tony Burak

U.S.
Securities and Exchange Commission

100
F Street, N.E.

Washington,
DC 20549-0505

    RE:
    Rand
    Capital Corporation (the “Registrant”) Annual Report filed on Form 10-K for the Fiscal Year Ended December 31, 2022

Dear
Mr. Burak:

On
behalf of the Registrant, this letter is to respond to the comments provided by telephone to the Registrant on October 2, 2023 related
to the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “Annual Report”). The
comments of the staff (the “Staff”) of the Securities and Exchange Commission (the “SEC”), as we understand them,
and the Registrant’s responses are as follows:

    1.
    Staff
    Comment: Item 7A. Quantitative and Qualitative Disclosure on Market Risk: The Registrant’s disclosure under Item 7A
    of the Annual Report does not fully comply with the requirements of Item 305 of Regulation S-K, which requires the Registrant to
    provide disclosure regarding sensitivities to external market factors with respect to its fixed income securities and changes to
    interest rates. The Staff requests that the Registrant revise its future annual reports on Form 10-K to include enhanced disclosure
    as required by Item 305 of Regulation S-K.

    Response:
    The Registrant acknowledges the Staff’s comment, and, on a go forward basis, will adjust its presentation to provide
    enhanced disclosures to comply with the requirements of Item 305 of Regulation S-K in its Annual Report on Form 10-K and its Quarterly
    Reports on Form 10-Q.

    2.
    Staff
    Comment: - Regulated Investment Company (RIC) Diversification Test: Please explain whether the Registrant satisfied the 50%
    RIC diversification test as of December 31, 2022, particularly in light of the holdings included within the portfolio. In connection
    therewith, did the Registrant consider those assets that exceed the 5% testing threshold?

    Response:
    The Registrant completes a detailed analysis of its portfolio on a quarterly basis to validate its compliance with the RIC
    diversification test requirements. Section 851(d)(1) of the Internal Revenue Code of 1986 provides that if a RIC meets the asset
    test as specified in Section (d)(1) (the “Asset Test”) for a particular quarter and then subsequently falls out of compliance
    in a future quarter because of a change in value of its investments, the RIC will still be in compliance with the Asset Test for
    future quarters unless the reason for the noncompliance, in whole or in part, was due to the acquisition of a security or other property
    by the RIC that results in noncompliance immediately after the acquisition. The Registrant had four portfolio company investments
    that exceeded the 5% threshold at December 31, 2022, but each are qualifying assets and satisfied the Asset Test, as none exceeded
    the 5% threshold immediately after their acquisition. Therefore, the Registrant was in compliance with the RIC diversification test
    as of December 31, 2022.

    3.
    Staff
    Comment: Diversified Fund: The Registrant states in its Annual Report that it is a “diversified fund”. Please
    explain how the Registrant is operating as a “diversified fund” in light of the holdings included in the portfolio.

    Response:
    The Registrant respectfully advises the Staff that, despite the disclosure included in the Annual Report, the Registrant
    does not operate as a “diversified fund” as defined in the Investment Company Act of 1940, as amended. While the Registrant
    was operating as a diversified fund when it made its BDC election in 2001, the Registrant’s definitive proxy statement filed
    with the SEC on June 8, 2001 disclosed the following:

“The
[Registrant] will continue to invest in assets as described above, but [it] is likely that it will no longer maintain a policy of diversifying
its investments in accordance with the diversification formulas applicable to diversified investment companies or of avoiding concentration
of over 25% of its total assets in any particular industry”,

    The
    Registrant has ceased operating as a diversified fund. However, due to an inadvertent error, the Registrant did not update its public
    disclosure in certain instances, including in the Annual Report. The Registrant undertakes to update all future disclosures to reflect
    that it is operating as a non-diversified investment company.

    4.
    Staff
    Comment: Fees and Expenses Table (Page 33 of the Annual Report): Approximately 7% of the Registrant’s portfolio consists
    of other business development company stocks. Please explain if the Acquired Funds Fees and Expenses (AFFE) for such other business
    development company stocks are reflected in the fees and expenses table set forth on Page 33 of the Annual Report.

    Response:
    The Registrant omitted the Acquired Funds Fees and Expenses (“AFFE”) from the fees and expenses table in the
    Annual Report, but determined that the applicable AFFE percentage would have been 0.56% for 2022.

    5.
    Staff
    Comment: Example of Total Cumulative Expenses (Page 34 of the Annual Report): Please re-compute and confirm the calculations
    in the referenced table for the 1 year, 3 years, 5 years and 10 years expense projections.

    Response:
    The Registrant has recomputed the calculations in the referenced table in the Annual Report with respect to the 1 year, 3
    years, 5 years, and 10 years expense projections as provided below. The Registrant confirms that the calculations specified in the
    Annual Report are accurate based on the following assumptions: (1) the base management fee to be paid by the Registrant increases
    in proportion to the 5% increase in net assets, and (2) all other expenses of the Registrant remain the same.

    1 year
    3 years
    5 years
    10 years

    Expenses on $1,000 investment (assuming 5% return)
    $ 104
    $ 301
    $ 480
    $ 856

    Net assets end of period (5% annual growth)
    $ 60,607,386
    $ 66,819,643
    $ 73,668,656
    $ 94,021,948

    Average net assets during investment period
    $ 59,164,353
    $ 62,270,482
    $ 65,694,988
    $ 75,871,634

    Management fees estimate (1.9% of average net assets)
      1,086,000
      1,180,913
      1,245,856
      1,438,848

    Incentive fees expense (assumed to remain same)
      332,000
      332,000
      332,000
      332,000

    Interest expense (assumed to remain same)
      1,028,500
      1,028,500
      1,028,500
      1,028,500

    Operating expense (assumed to remain same)
      3,698,833
      3,698,833
      3,698,833
      3,698,833

    Budgeted total expense
    $ 6,145,333
    $ 6,240,246
    $ 6,305,189
    $ 6,498,181

    Budgeted expense per $1,000 invested
    $ 104
    $ 301
    $ 480
    $ 856

    6.
    Staff
    Comment: Blocker Corporations (Page 2 of the Annual Report): Please explain (i) why the Registrant holds certain equity investments
    through wholly owned blocker corporations (“Blocker Corps”), (ii) why the Registrant believes that the use of Blocker
    Corps help facilitates its compliance with the RIC qualification rules and requirements and (iii) which conditions(s) for RIC qualification
    is being facilitated through the use of the Blocker Corps.

    Response:
    The Registrant respectively submits that the primary reason for its use of Blocker Corps is to permit the Registrant to hold
    certain equity investments in portfolio companies that are organized as limited liability companies (“LLCs”) (or other
    forms of pass-through entities) in a manner that allows the Registrant to satisfy the requirement under Section 851(b)(2) of the
    Internal Revenue Code of 1986 that at least 90% of its gross income for U.S. federal income tax purposes must consist of qualifying
    investment income.

    The
    Registrant believes that the use of Blocker Corps facilitates compliance with the 90% gross income test (as specified in Section
    851(b)(2) of the Internal Revenue Code of 1986) by allowing income from the Registrant’s non-qualifying LLC equity investments
    to be taxed at corporate tax rates at the blocker corporation level, which after-tax income can then be distributed as dividend income
    to the Registrant in a manner that would be qualifying income to the Registrant (which is a RIC).

    7.
    Staff
    Comment: Blocker Corporation Expenses: If the Registrant incurs any fees and expenses at the blocker corporation level, please
    explain how these fees and expenses are reflected on the Registrant’s Statement of Operations and in the Fees and Expenses
    Table.

    Response:
    The Registrant files its financial reports on a consolidated basis, as indicated in its Annual Report. These subsidiaries
    are consolidated using United States generally accepted accounting principles (“GAAP”) for financial reporting purposes.
    Any fees and expenses incurred at the blocker corporation level are included on the applicable line item of the Registrant’s
    Statement of Operations. Such fees and expenses are also included in the “Other expenses” line item on the Registrant’s
    fees and expenses table.

    8.
    Staff
    Comment: Schedule of Portfolio Investments: With respect to the Registrant’s Consolidated Schedule of Portfolio Investments,
    any investment that is a non-qualifying asset should be labeled as such and also include a footnote explaining the significance of
    an investment being classified as non-qualifying asset.

    Response:
    The Registrant acknowledges the Staff’s comment and will identify any investment that is a non-qualifying asset on
    its Schedule of Portfolio Investments in its next Annual Report on Form 10-K. The Registrant will also include a footnote explaining
    why each investment that is a non-qualifying asset is considered to be a non-qualifying asset and the significance of an investment
    being classified as a non-qualifying asset.

    9.
    Staff
    Comment: Portfolio Valuation (Page 63 of the Annual Report): Please provide an explanation of any significant fluctuations
    in the valuation of any portfolio holdings between December 30, 2021 and December 31, 2022.

    Response:
    The Registrant summarizes its overall valuation methodologies in the Annual Report as part of its schedule of significant
    unobservable inputs, which is used to determine the fair value of the Registrant’s Level 3 portfolio holdings. A majority of
    the Registrant’s investments are made in smaller, middle market businesses, and, as a result, the Registrant may use various
    industry and economic data sources as well as other financial and non-financial information provided to the Registrant by the management
    of each portfolio company in determining fair value at the end of each period.

    During
    calendar year 2022, the Annual Report included a schedule that detailed a ($5.9 million) net change in unrealized appreciation or
    depreciation of investments. Included in this schedule were portfolio company investments for which we recorded $6.8 million in increases
    to the unrealized portfolio valuation and approximately $12.7 million in decreases to the unrealized portfolio valuation. Of these
    portfolio company investments, one or more of the Registrant’s portfolio companies had reported market acceptance of its product
    and services, which resulted in a demonstrated growth in revenues and formed the basis of the valuation change in accordance with
    ASC Topic 820. This schedule also included several portfolio companies in which we sold our investment, with the valuation for those
    portfolio company investments reflecting prior valuation changes. The Registrant’s fundamental valuation policy relies upon
    a market-based approach, and it considers factors such as the valuation at which a portfolio company sells new equity securities
    to a new investor; the favorable or unfavorable trends in the portfolio company’s historical financial statements; current
    industry multiples in the respective industry sector for the portfolio company; and also public company comparisons when available.

    10.
    Staff
    Comment: Schedule of Portfolio Investments: In the Registrant’s future SEC filings, any Level 3 investments held by
    the Registrant should be identified with a tick mark identifying such investment as a Level 3 investment.

    Response:
    The Registrant acknowledges the Staff’s comment, and on a go forward basis, will identify any Level 3 investments with
    a tick mark on its Consolidated Schedule of Portfolio Investments.

    11.
    Staff
    Comment: Note 1 Summary of Significant Accounting Policies (Page 78 of the Annual Report): As part of the Registrant’s
    Summary of Significant Accounting Policies in future SEC filings, please specify that the Registrant is an investment company and
    follows the investment company reporting guidance in Financial Accounting Standards Board ASC Topic 946, Financial Services –
    Investment Companies.

    Response:
    The Registrant acknowledges the Staff’s comment, and on a go forward basis, will disclose that the Registrant is an
    investment company and follows the investment company reporting guidance in Financial Account Standards Board ASC Topic 946 in its
    Summary of Significant Accounting Policies footnote.

    12.
    Staff
    Comment: Valuations: The Staff notes that 65% of the Registrant’s investments are valued at cost. Please confirm that
    a market-based approach is being utilized by the Registrant and, in connection therewith, please describe how the Registrant is complying
    with the guidance set forth in ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”).

    Response:
    The Registrant acknowledges the Staff’s comment and respectively submits that, for its portfolio company investments
    valued at cost, the cost of such investment does accurately represent the fair value. The Registrant’s external investment
    advisor and Board of Directors review the valuation for each portfolio company on a quarterly basis in accordance with guidance set
    forth in ASC Topic 820, Fair Value Measurement and Disclosures to determine the fair value of each portfolio investment, including
    by using a market-based approach.

    13.
    Staff
    Comment: Valuation of Publicly Traded Securities: The Staff notes that the Registrant’s publicly traded securities
    are currently valued using the average of the last three trading days of each measurement period. Pursuant to ASC Topic 820, these
    securities should be valued as of the last trading day of the measurement period.

    Response:
    The Registrant acknowledges the Staff’s comment and, beginning with its Quarterly Report on Form 10-Q for the quarter
    ended September 30, 2023, will value its publicly traded securities as of the last trading day of the measurement period as prescribed
    in ASC Topic 820.

    14.
    Staff
    Comment: Valuation of Publicly Traded Securities: Why are the Registrant’s publicly traded securities classified as
    a Level 1 Investments if they are not valued as of the last trading day of the measurement period?

    Response:
    The Registrant acknowledges the Staff’s comment and on a go forward basis will value its publicly traded securities
    as of the last trading day of the measurement period.

    15.
    Staff
    Comment: Note 2. Investments (Page 83 of the Annual Report): The guidance set forth in ASC Topic 820 provides for three valuation
    approaches: Market approach, Cost approach and Income approach. The Registrant identifies in Note 2 of the Annual Report that it
    uses the Asset approach. How is use of the Asset app