Aspen Aerogels

Venture Capital Case: Aspen Aerogels

There are too many markets where aerogels can have large business impacts and there are already other big corporations, such as Cabot, 3M, starting get interested in this area. I would recommend Aspen to seek additional funding from RockPortCapital first. If the funding request for RPC is not successful, then Aspen could go out to seek other investors. Because RockPortCapital already provide them weed funding and additional investments would increase VCs control if they continue to provide the funding.

Before considering the amount of capital they want to raise, it is necessary for Aspen to decide which markets they can make more profits and how many areas they want to commercialize and focus on at current stage. After this, Aspen can use the second round funding to achieve their manufacturing milestone (cost reduction) and expand sales and marketing force to generate revenues. Because of the uniqueness (new cleantech product, patent strategy, etc.) of the aerogels products, I would recommend Aspen to seek enough capital to enable them to continue to speed up product delivery and strengthen sales and marketing force. Meanwhile, Aspen should actively build strategic business alliance with governmental agents such as NASA and other large industrial companies (Military/Aerospace, Housing, Marine, etc) to expand its market cap to improve its profitability. We could expect three more rounds large capital financing if Aspen can hit certain two milestones: drive down the costs and expand the sales force. I would recommend Aspen to exit in 10 to 12 years with an IPO rather than M&A.

Here are the reasons that I consider why Aspen should go out to seeking funding to build up this cool “solid smoke” products. First, there is a huge validated potential market exists and very few players out there. Aerogels related products are widely used in all areas: oil and gas industry, apparel market, automotive market, military...