Making Prize Competitions Work for your Climate Startup
Prize competitions, like the X-Prize, are a complicated beast. While the prizes themselves can seem like an attractive non-dilutive funding source, the competition process itself is often onerous, highly competitive (duh), and can be difficult to navigate over the typical multi-year process. And, in the end, only a few businesses win. So, why bother?
We sat down with Zenia Tata to dig into the challenges and benefits of incentivized prize competitions. Zenia has worked in the innovation space for over 25 years and most recently led the team at XPRIZE Foundation responsible for designing the parameters and structure of many of their most successful large-scale prize competitions.
It’s not just about the money
Many prize organizations in recent years have shifted from winner-takes-all competitions to a winners circle with multiple prizes. Even so, in the end there are still few winners and many applicants. So why apply? Because there are several other benefits beyond the prize money.
Remember, the prize organizers and the sponsors need you as much as you need them. Start a dialogue with the prize team: What will they do for you throughout the prize process? Will they give you access to potential investors? Potential partners? Potential customers to help you assess product-market fit? Will there be opportunities for publicity? Will you be provided with access to costly things like lab testing?
To truly understand the value of a prize competition for your business, you need to talk to the prize organization to understand the entire prize ecosystem and what it can do for you.
Close only counts in horseshoes and handgrenades
If your solution won’t meet ALL of the requirements of the prize, DON’T apply. It’s not a good use of your time and will present significant distractions for your team as you attempt to fit a square peg into a round hole.
Before applying, ask yourself: Will we have to pivot from our current trajectory 15 months down the line to make our product conform to the technical parameters? Are there market or customer criteria for the solution that don’t fit with our go-to-market strategy? Prize criteria are almost always 100% fixed and firm, so don’t expect them to change during the course of the competition. Also remember that there will be teams applying from across the world whose business model and vision will align with the prize guidelines, so if you’re not 100% a fit, don’t bother.
If you do decide to apply, make sure that you and your team are on the same page about what the process will require and what your vision for the competition and final product will be. You don’t want to invest time in the process just to watch key members of your team walk away part way through the competition.
Build a relationship with your prize manager
If you are a good fit, how can you go about taking advantage of all the benefits the competition process offers? First and foremost, align with and make an ally out of your prize manager. Let them in on what you’re up to, invite them to check out your product, and keep them in the loop. Your relationship with your prize manager is your key to understanding and making use of the entire prize ecosystem and, ultimately, squeezing as much value out of the process as possible. Your manager can help connect you with potential partners, funders and even publicity. Remember, it's a give and take — they need you as much as you need them.
It’s also valuable to build personal relationships with your judges. Even if you don’t win, they could refer you to potential investors or even join your advisory board.
Solve for the hardest challenges first and work backwards
Even though the competition milestones are linear, your approach should not be. First make a clear plan to solve the hardest technical parts of the challenge. Many teams will start with the lowest hanging fruit and leave the big hairy problems towards the latter part of the competition; this is rarely successful and generally leads to a lot of disappointment. Once you have a sense of how you may address the hardest technical issues, then make a plan for the rest and start building!
You don’t have to do it all yourself — partnerships add value
The prize design team and prize sponsors generally want a holistic solution. This can create a tremendous amount of pressure for your team to solve for every part of the given problem. Many teams think they have to build everything themselves, which can end up requiring them to pivot their business plan part way through the competition. Consider instead outsourcing work that is outside your core business. For example, if you build hardware, partner with another organization to build the software. If you can build the product but don’t have local market expertise, find a distribution or delivery partner in market. These types of relationships can take the weight off your team and let them do what they do best. Yes, you will end up having to share the money (if you win), but it will be worth the reduced headache in the end. Plus, if you don’t win, you’ve still built an incredible relationship that will keep paying dividends for your business for years to come.
Zenia Tata is an innovation strategist, a futurist and a humanitarian who is passionate about tapping the vastness of human potential to tackle the planet's most vexing problems. As Chief Impact Officer at XPRIZE, Zenia designed more than 25 different innovation challenges to incentivize development of moonshot technologies in areas such as renewable energy, carbon dioxide removal, zero-waste mining and water abundance. At this time, Zenia is consulting with the Australian Government at Breakthrough Victoria, a novel $2 billion impact investment fund focused on innovations in terrestrial and marine waste, climate tech and food and water technologies.