WASHINGTON – The high-profile failures of several satellite companies in recent years have made some financiers receptive to lower-budget space projects they previously shunned, according to industry officials.

Once lured to multibillion-dollar projects like Iridium and Globalstar that had strong corporate support and promised large returns, these investors are now showing interest in companies operating on a relative shoestring.

Gene Curcio, a California venture capitalist, said the tough investment climate today means people considering putting money into satellite projects are interested more in low-risk ventures than in high-profile projects that carry greater financial risk. Iridium, for example, consumed about $5 billion before melting into bankruptcy in mid-2000.

“Investors are tired of throwing money into the arms of the big guys,” said Curcio, who is president of Venture Partners, Long Beach, Calif. “They [prefer] smaller systems where they can have a little more control … The bottom line is when people are making a lot of money, they are out spending, but now they have to roll up their sleeves and go to work.”

Frank DiBello, vice chairman and managing director of SpaceVest, a Reston, Va., investment firm that specializes in space companies, agreed that investors are more interested in smaller projects today than they were several years ago, when companies like Motorola Inc., chief back of Iridium, put up large amounts of money to support satellite ventures and attracted other investors to join them.

SpaceVest is an investor in SPACE.com parent of Space News.

“Less ambitious systems that don’t have the burden of heavy infrastructure costs are clearly finding a more receptive ear in the marketplace today,” DiBello said. Several years ago, investors were blinded by [the company] whose flag was at the helm of the project.”

Dino Lorenzini, chairman and chief executive office of Aprize Satellite Inc., Fairfax, Va., said his company recently has attracted interest from several venture capitalists and other investors for its relatively inexpensive AprizeStar asset-tracking project. Venture Partners and SpaceVest are among the interested investors, he said.

The AprizeStar satellite system will initially consist of up to 10 miniature spacecraft costing about $1 million each to build and launch. Each satellite will be a 20-centimeter cube and weigh just over 10 kilograms.

Two of the AprizeStar satellites already are in orbit, and Lorenzini expects the cost of launching the rest of the system and developing ground-based systems to cost about $15 million.

Plans call for the other eight satellites to be launched in mid-2002 on a pair of Dnepr launch vehicles.

Lorenzini said his system’s low cost once seemed too inexpensive to potential investors interested in more expensive and complex systems.

“A few years ago, people wanted to throw $80 million or $100 million at us, and I said ‘I don’t want it’ because their terms were too restrictive,” he said.

These investors, whom he did not identify, were interested in acquiring majority control of the company and looking for a quick way to realize a return on their investments, Lorenzini said.

“They wanted to flip us and sell us off,” he said. “We wouldn't’t have known who our owners would be.”

Now, with companies such as Iridium and Globalstar having cost investors billions of dollars and leaving them with little or no return, Aprize is attracting the relatively small investments her prefers, Lorenzini said.

He said one of his company’s intended service providers is interested in making an investment, as are several other investors, including Venture Partners and SpaceVest. Aprize officials are evaluating the offers, according to Lorenzini.

Another asset-tracking project, called the Satellite Enabled Notification System (SENS), under development by AeroAstro LLC, Herndon, Va., also is built around the idea that low-cost hardware is a recipe for success.

The SENS system is intended to cost between $8 million and $12 million and involve the launch by 2004 of 10 miniature satellites, said David Goldstein, AeroAstro’s vice president of business development.

The costs of systems like AprizeStar and SENS are substantially less than other satellite projects in part because their backers plan to build their systems gradually, rather than develop a complete network before entering service.

Under such a business model, revenue from early operations can be used to fun further development of a system, reducing the amount of up-front case needed to finance a project.

Lorenzini said Aprize is working with partners to test its two existing satellites and develop an initial customer base. The AprizeStar system is designed to carry small bursts of data for clients interested in tracking mobile assets such as shipping containers.

The Aprize satellites contact the antennas on items to be tracked and record information about the location and condition of the cargo. The spacecraft record the data, then beam it down to receiving stations for delivery to the customer.

The satellite systems being developed by Aprize Satellite and AeroAstro both are attractive because they require relatively low amounts of investment and aim to do as much as possible without outside financing, DiBello said. “A phased deployment means you can begin revenue operations before sinking the entire infrastructure costs and is very appealing,” he said.

Lorenzini said his company currently generates about $1 million annually selling space hardware and software to universities and organizations such as the Canadian Space Agency, and is using the money to fund the development of the AprizeStar system.

Later, the company may consider borrowing funds to fuel expansion, but only if it can service its loans from its revenues. Lorenzini expects the AprizeStar system to generate a positive cash flow within two years of starting commercial operations.

Goldstein said SENS also will be built out gradually. AeroAstro plans to use revenue from the sale of communications equipment for terrestrial applications to help fund its satellite venture, he said.

Interests Shift: Dino Lorenzini (above) chairman and chief executive officer of Aprize Satellite Inc., shown next to one of the firm’s small satellites, said with companies such as Iridium leaving investors with little or no return, Aprize is attracting the relatively small investments he prefers.