A Deep Dive into Prize Competitions (Part 2)

Deconstructing the “Full-Stack” of a Prize Program

Note: We thought this was going to be a 2 part series, however, there is a lot to cover on the topic of prizes so…there will be more parts! This section covers the specifics of how the solar prize was designed. What is missing in the prize ecosystem, when prizes are not the right choice, and the prize guide will all be coming.

The “8-Month Slog” That Built the Fundamental Building Blocks

In Part 1, we told the winding, multi-year story of how prize authority at DOE went from a dormant law to a real, usable tool. We ended with the inflection point: a new leader, a pressing political need, and a 2-year-old white paper being suddenly pulled off the shelf and greenlit in a week.

That approval was a victory, but it was just the beginning. This is where the real work started.

The story of how we built the Solar Prize between 2015-2018 is an early attempt at what we now call full-stack funding program design. But to be clear, we did not have this framework when we built the Solar Prize. What we had was approval to do a multi-stage prize and partner with mission-aligned organizations. The mechanics of how to do either were unknown. What resulted was an 8-month slog where we fiercely debated opinions, because there were no facts, firm legal structures, or precedents to follow. Everything could be argued, and was.

We’re going to explain what we built using the 8 Full-Stack layers. Not because that’s how it happened, but because it’s the clearest way to explain the decisions we struggled through. It’s the framework we wish we had.

The Full-Stack Breakdown of the American-Made Model

Layer 1: Thesis & Success Map

This whole effort started with the “Leaky Applicant Pipeline” issue. Our main program for supporting solar entrepreneurs was the Sunshot Incubator. It was a solid and successful program, but each year the number of new, first-time applicants was going down. The traditional Funding Opportunity Announcement (FOA) (AKA Notice of Funding Opportunity (NOFO)) model was reaching fewer new companies and funding the same shrinking pool of usual suspects who knew how to navigate grants.gov, cost-share requirements, and 100-page FOA instructions.

We had two other problems. We wanted to use government funds to support the hard things that were not attracting traditional investment. This meant the program was focused on supporting domestic manufacturing, which meant the program was seeking hardware technology development and manufacturing. This is not what one would traditionally think to use a prize for, the way you might for crowdsourcing a solution to explore data or finding a novel solution to a predefined narrow problem.

The other main challenge is that entrepreneurship is very difficult in a normal situation, and solar entrepreneurship was extremely hard at that time due to a solar boom-and-bust cycle at another low resulting in disinterest from private investment. We had heard many interesting anecdotal stories that important solar companies were just a few days from collapsing for any number of different reasons, and random collisions and serendipity resulted in them having the right connection to the right person that was needed to overcome many of the challenges. Without those connections, the company fails. This appears to be a near universal story of entrepreneurship. We wondered, how often is that critical connection not made and an otherwise viable business goes down? Is there a way we could systematize this organic, essential-to-commercialization process?

These challenges shaped our guiding thesis. The traditional FOA process wasn’t just a filter; it was a wall. High barriers to entry were blocking hardware-focused entrepreneurs. Even if they got funding, lack of systematic support meant many were failing for non-technical reasons. If we built a new pathway with a low barrier to entry, we could attract these missing innovators. If we simultaneously built a support network around the prize, we could systematize the serendipity and increase their chances of success.

This thesis gave us a clear definition of success with four requirements. First, attract new applicants. Second, support hard tech and domestic manufacturing. Third, build a functional pipeline where prize winners would eventually flow into larger DOE programs and set them up for private sector support. Fourth, prove the value of a support network as a measurable part of success. These were our strategic anchors that let us defend the unconventional design choices we were about to make.

Layer 2: Ecosystem Scan & Coalition Building

Our ecosystem scan was very bottom-up. This is the part of the process most government programs are good at: trying to understand their applicant pool. We spoke with hundreds of startups, venture capitalists, incubators, and our own awardees. We didn’t ask if they wanted prize money. We asked why they were struggling, what they actually needed to succeed, and what amount of funding would make a material difference.

The answers to the funding questions were predictable. They needed more money, faster. But the answers to “why are you failing” were revealing. We heard the same story repeatedly: near-death experiences saved not by a grant, but by a random collision with the right person at the right time. This scan validated our thesis. The serendipity problem wasn’t just our theory, it was the lived reality of entrepreneurship.

That being said, when we asked entrepreneurs what we should build into the program, nobody asked us to create a support network. They advocated for all program funds to go directly to them as cash prizes. They believed they would put every dollar to better use than anyone else. This is where we had to make a critical deduction that went against what our customers were telling us. Capital alone is not enough. The entrepreneurs were telling us this in their own stories, even as they argued for the opposite. They’d survived because of connections, not just capital.

This insight drove our entire design approach. We couldn’t just offer cash prizes. We had to build the connective tissue around the prizes that would systematize the serendipity. But this created our central design challenge: how do we build a support ecosystem robust enough to solve the challenges entrepreneurs face, without pulling so many resources away from prize purses that entrepreneurs no longer see the program as valuable?

We should acknowledge a failure on the coalition building with other funders part of this layer. At the time we were so overwhelmed with the scope of the task and being pressured to deliver something by leadership that we did not have the mental capacity or time to consider whether anyone else was doing similar work that we could partner with. This is usually the case for anyone trying to develop and launch a program in any organization, and it represents the lowest hanging fruit for amplifying impact. Were we to repeat the program design process, we would include a thorough ecosystem scan of any mission-aligned funders in other federal and state governments and also private funders. We would also have tried to engage with and learn from other expert prize practitioners, but at the time there wasn’t an obvious way to do that. This remains difficult and is something that requires a better solution. True success isn’t running a single useful program. It’s helping align all those who are seeking to support an area with funding and helping everyone do more and do better.

Layer 3: Mechanism & Project Design

This layer was the heart of the 8-month slog. We had our thesis. Now we had to design the actual prize structure that would work. The problem was we insisted on a multi-stage prize and there was the leadership fear we covered in Part 1: “They’ll just take the money and walk away.” With grants and cooperative agreements, the government maintains control through active project management. With prizes, you have none of that. Once awarded, prize funds become non-federal with no strings attached.

Our ecosystem scan told us that entrepreneurs wouldn’t walk away with the funds they won in the first stage of a multi-stage prize. When entrepreneurs have a clear target and a credible path to more funding, they don’t abandon the work. They work harder. But this argument wasn’t enough for leadership. We had to work through many iterations of prize structures to find a path forward that would address their concerns.

The answer was a multiple escalating prize structure, but with a low enough dollar amount in the first stage that if a competitor did just walk away (which leadership was certain would happen), it was a manageable risk. We made each stage exclusively available to winners of the previous stage. If you didn’t win the Ready stage, you couldn’t compete in the Set stage. If you didn’t win the Set stage, you couldn’t compete in the Go stage. This changed the math. You win Ready and get $50,000. Now you’re one of 20 teams competing for 10 Set prizes worth $100,000 each. A 50% chance of winning is hard to resist. You’re not competing against the world anymore. You’re competing against 19 other teams who also won. Similarly, once you win Set, you have a 20% chance of winning $500,000. No one walks away from those odds.

This is how we solved the no strings attached problem. We created motivational strings. The incentive to win the next, larger prize pulled everyone forward. The structure gave leadership multiple decision points. By the time we were awarding two $500,000 Go stage grand prizes from the original 20 Ready stage companies that started with a problem to solve, teams had already demonstrated a proof-of-concept, built a prototype, and secured commercial partners. We weren’t betting on an idea. We were awarding demonstrated success.

Layer 4: Support-Service Layer

The prize structure solved the walking away with cash from the first stage problem. But we still had to solve the serendipity problem and the hard tech gap. This is where the approval to partner with mission-aligned organizations came in. We had to figure out what that meant in practice.

From our research, we knew we could not just tell entrepreneurs to go network. That is a large part of what they already do. The issue is it’s hard to find the right people to talk to. Conversely, groups that want to support the best entrepreneurs also struggle to find them and identify which ones are worth talking to. We wanted to produce something that solved both sides of this issue. We believed that mission-aligned organizations - like business incubators, university entrepreneurship programs, makerspaces, and others - would already be interested in helping and some would do so organically. What was missing was a clear way for competitors to see which organizations were interested.

To solve this we created the American-Made Network as a repository of entities that could help the prize competitors. Members of the Network were called ”Connectors” to recognize their role as connective tissues in the innovation space. To ensure these Connectors were high quality, we created a sign up process and credibility check to confirm the organizations were what the Network was intended for. After that, their information would be visible to prize competitors. But we weren’t sure anyone would actually sign up and help. This is where we used the prize tool on the network itself. We set up Recognition Rewards. Competitors were encouraged to review the Network for organizations that could help them and if a Connector was identified by a winning competitor as materially helping them succeed, that Connector also got a cash prize (on the order of low single digit thousands of dollars). This created a direct financial incentive for organizations to sign up for the Network, be responsive to competitor requests, and do their best work.

As a hedge, we also set aside funds to directly contract with a few Power Connectors to accomplish specific tasks like recruiting and applicant support. By having both passive Connector incentives and active Power Connector contracts, we built a support system that didn’t traditionally exist for government programs.

While the Network connected competitors to entities that could help with business development and maturation, there was also a need to connect competitors to world-class research and testing capabilities. The final piece in the prize puzzle to serve this need was a technical services voucher. Prize authority allows the government to award cash or other things of value. When Solar Prize competitors won the Set phase, they received their cash award and a $50,000 voucher that could be used at any National Lab to leverage their technical experts and facilities. Vouchers were use-or-lose with a set time frame. This was the answer to the hard tech gap. The voucher forced competitors to engage with resources they wouldn’t have naturally pursued as National Labs were seen as difficult to contract and work with. DOE support at this stage bridged that gap.

The Ready, Set, Go model provided the cash and motivation. The Network provided the connections. The vouchers provided access to resources competitors couldn’t afford or access. This was why the American-Made model worked when other prize programs had stalled. We weren’t just running a competition; we were building an ecosystem.

Layer 5: Governance & Decision Ops

This is the layer where we truly failed. It wasn’t due to lack of experience. We knew how approvals worked. Our failure was in not anticipating what happens when a well-worn approval process built for grants suddenly encounters something it’s never seen before.

In a traditional FOA, the approval architecture is straightforward. Solicitations are typically approved by the Office Director with advice or approval from the Assistant Secretary or another Senate-confirmed position. Once a solicitation closes, selections are made by a Selection Official based on recommendations from a Federal Consensus Board and a Merit Review panel. That process is subject to change, but can typically be navigated.

Prizes operate differently. The COMPETES Act included vague language requiring the Secretary’s approval for any prize over $1 million and Congressional notification for prizes over $50 million. We’d spent years working to get that $1 million threshold delegated down from the Secretary to the Assistant Secretary level, which would let us move faster with multiple prizes (getting Secretarial approval on anything is a behemoth of a process). This delegation effort had been in motion since before the Solar Prize design work began.

The selection process was also different. Prizes use a single Judge who receives input from expert reviewers, rather than the layered Federal Consensus Board structure. There was confusion about who could be designated as a Judge. Due to the ongoing confusion around prizes, legal advisors had settled on designating the Secretary of Energy as the default Judge unless that authority was explicitly delegated. We’d worked hard to get a single-use delegation from the Secretary down to our Solar Office Director for this specific competition.

We ran the competition. Expert reviewers scored the submissions. The Director made the selections based on those scores. We thought we were done. We were not.

The problem emerged when we tried to announce the winners. We’d assumed that having authority to make selections meant we had authority to communicate those selections. That assumption was wrong. At the same moment, there appeared to be a re-reading of the statutory language in the American COMPETES Act. Since the Secretary was required to approve any prizes over $1 million, a legal question arose about what triggered that approval. Was the $1 million threshold for approving prize competitions before they launched, or was it for awarding prize funds totaling over $1 million? The distinction mattered because our multi-stage prize had a total pool above $1 million even though the first stage awards were only $50,000 each.

Before we could sort through this question, the announcement package hit a completely different approval queue with a much higher threshold. Everything froze. So much time had passed between the initial approval to launch the prize and the first round of selections (over a year) that leadership personnel had moved around. The people reviewing the announcement package were senior officials who’d never heard of the Solar Prize and didn’t understand prize authority. All the old fears came back. “They’ll just take the money and walk away.” “There are no strings attached.” “This is too risky.”

Even though the selections had been made, we could not notify the winners. The delay stretched to six months. Twenty teams who’d beaten out hundreds of competitors had done the work on their own dime and then waited. And heard nothing. For a startup, six months is an eternity.

We eventually got the approvals. It took dozens of meetings, countless emails, and leadership staff who spent political capital to push it through. Once we got through it, we’d set the precedent. The next prize program had a path to follow. But it was painful the first time.

The lesson turned out to be simple but critical: making a decision and communicating a decision are two entirely separate processes with different approvers. This seems obvious in retrospect, but it wasn’t obvious when we were in the middle of it.

The Governance & Decision Ops layer feels like a check-the-box activity when planning. But in reality, it’s the source of the most frequent and painful delays. To actually succeed at this layer, you have to map out everything the approval process involves. Everyone who needs to sign off, their availability and awareness, the external political environment, the budget process, the holidays and summer vacations, and so on. This is not fun work. But it’s the difference between a program that hits timelines and a program that leaves winners waiting in the dark for six months.

Layer 6: Building Awareness

Our failure to map out the full governance process had serious ramifications but that is not the end of the story. There were still other outstanding challenges around awareness that we needed to consider to make this prize work. We’d designed the program. We finally had approval to launch. Now we faced a different problem: how do you tell people about it? In government, building awareness is one of the most constrained parts of running any program. Government must be fair, which means everyone must have equal access to opportunities. In practice, this means targeted outreach is essentially forbidden.

Funding opportunities must be posted on grants.gov or challenge.gov. Program offices can email people who’ve signed up for their newsletter. If deemed important enough, an Office can issue a quasi press release (you can’t call it a press release) or the Public Affairs Office for the Department can elect to distribute via a formal press release - but it’s typically a high bar reserved for pushing out content to the media. And then back in the office, staff might post on LinkedIn. That’s about it. What you can’t do is what most would instinctively want to do: identify high-potential candidates and personally invite them to apply. If you email someone directly about a funding opportunity and they apply and aren’t selected, they could file a complaint. Or if they did win, and someone found out that you emailed that group directly, they could also file a complaint about unfair advantages. It sounds paranoid, but these are the scenarios federal employees are warned about in ethics training.

This creates a closed ecosystem. A specialized class of people emerges who are experts at monitoring funding announcements and navigating the application process. This is one reason why the number of first-time applicants to most DOE programs hovers around 25%.

Our strategy for the Solar Prize was to use the full-stack design to bypass this entire problem. We relied on our Support-Service Layer. Our Power Connectors and Network Connectors weren’t federal employees. They didn’t have these restrictions. They could send direct emails to entrepreneurs in their network. They could host workshops and invite specific companies. They could do literature reviews and personally reach out to researchers. All the things we couldn’t do, they could. And because we’d built Recognition Rewards and Power Connector contracts into the program, they were incentivized to do it.

Awareness is the first part of the pipeline, but the less obvious part is converting interested parties to applicants. It is unfortunately impossible to know how many high-quality potential applicants take a look at an opportunity and decide it’s not worth the trouble. Maybe they think it’s too difficult to apply, or maybe they’re concerned about their IP, or something else. From conversations with applicants, we think this number may be high. Given that we sought to achieve the minimum possible applicant material needed to make an informed selection decision, we focused on reducing barriers. This is really hard to do in government because the instinct is to always ask for a bit more information, just in case. The end result for the prize was a 2500 word maximum application (5 pages), a 90-second video, and a summary slide. That’s it. When paired with a $50,000 prize, it was hard for anyone to argue this isn’t worth it or this is too risky to my company. (For context, FOA/NOFOs ask for 20+ page full applications, detailed budgets, and a variety of supporting documents)

This is how we solved the Leaky Pipeline. In Round 1 of the Solar Prize, approximately 75% of applicants were first-time applicants to any DOE program. In subsequent rounds, the number stabilized around 50% new applicants per round. Still more than double the typical rate. We didn’t find those applicants. We built an incentivized system that found them for us. The Network wasn’t just about supporting winners. It was our entire awareness and recruitment engine.

Layer 7: Budget & Timeline Architecture

We had the structure, the support network, the funding amounts. Now we had to figure out when everything would happen and how the money would flow. When we were designing the Solar Prize timeline, we were juggling competing constraints. Staff availability, external reviewer availability, competitor needs, the political cycle, program infrastructure build time, and legal and contracting timelines.

The overwhelming temptation in government is to design programs for the convenience of yourself and your team. Launching any program is hard enough. The prevailing attitude can easily become, “Take it or leave it, we’re doing the best we can.” A recent example of this:

This timeline is ideal for staff. It goes over a holiday week so staff won’t have to handle anything while off. It is 31 days (the minimum allowable time), giving DOE staff more time for processing. But there’s a counter party to this arrangement. Applicants are now forced to prepare submissions during holidays when their own team and potential partners are out of office and unavailable. This approach is unlikely to help a program trying to reach new audiences. To be clear, we are guilty of this ourselves. Sometimes it feels like the only option, but it definitely is not the best option.

The ideal approach is to start with a different question: in a perfect world with no constraints, what is the right schedule for the entrepreneur? We initially determined that a 3-month competition period for each stage made sense. Fast enough to maintain momentum but long enough to get real work done. However, reality intervened. In practice, a 3-month window was too tight for notable progress as well as too fast for the voucher process. The legal agreements and setup time meant vouchers couldn’t start in time to actually help competitors.

We adjusted the next time we ran the program. We shifted to a 4-month timeline per competition stage. Three months had been too tight. Competitors needed more time to do the actual work required for each stage, and the voucher legal agreements needed time to process so Labs could help in a timely manner. An extra month gave everyone the breathing room they needed.

The broader principle here is worth restating: the overwhelming temptation in government is to design programs for staff convenience. An alternative that can help drive new applicants is to start with what’s best for the people you’re trying to serve. Then figure out how to make it work within your constraints. Not the other way around.

Layer 8: Impact Verification & Feedback Loops

We’d built the model. We’d survived the governance nightmare. We’d launched Round 1 and made our first awards. Now we had to prove it actually worked. This layer is where many government programs struggle. Not because they don’t create impact, but because the staff don’t always have the time, resources, or incentives to track and demonstrate impact convincingly. And without proof of impact and the ability to clearly communicate it, programs continue or end based mainly on political support (for whatever reason).

While certainly not always the case, a common challenge with impact measurement in government is that the people who design programs are often not the people who assess whether those programs succeeded. The timeline works against you. It takes 12 to 18 months to design, launch, review, select, and put awards in place. Those awards tend to last 2 to 4 years. Projects often extend an extra year (due to delays) so there is a 3-6 year gap between program justification and project closeout. DOE has roughly 10% staff turnover per year (on top of staff promotions and transfers), which means projects may have changed hands once or twice by the time the awards end. By the time you’re supposed to assess impact, you’ve moved on to your next project. Your leadership has moved on. If someone does an assessment, it may be because the organization needs to justify the program’s existence, but it’s usually a rushed exercise done by whoever is available rather than whoever created and defended the program’s original thesis.

There are many examples of good impact assessment strategies that resolve the issues described above. In the specific case of the solar prize, we avoided this trap through one critical design choice: we made the Solar Prize recurring. Not a one-off competition. A recurring program that would run every year. When you want to run Round 2, you have to show leadership that Round 1 worked. A recurring program forces you to care about impact assessment because that’s how you justify running the program again. This doesn’t work for every program, but when it’s possible, the incentives align in a way that one-off programs often can’t match.

Remember our Success Map from Layer 1? We’d identified four metrics that defined success: attract new applicants, support hard tech, build a functional pipeline, and prove the network’s value. They were testable hypotheses.

Round 1: 75% of applicants were first-time applicants to any DOE program. Rounds 2-8 stabilized at 50-60% new applicants per round. We weren’t just funding the usual suspects with a new mechanism. We were reaching an entirely new population of entrepreneurs. We tracked voucher usage. Usage rates were above 90%. We surveyed winners and asked what contributed most to their success. Winners cited the Network connections and Lab vouchers as frequently as they cited the prize money itself. This proved our support-service layer wasn’t just a nice-to-have. It was central to why the program worked. Round 1 was limited to hardware-only solutions, which guaranteed we’d hit the hard tech metric. But the other metrics - new applicant rates, network value, and pipeline function - were what actually validated the prize architecture. Those proof points became the foundation that allowed future competitions with this structure to get approved.

One of the strongest proof points came from the competitors themselves. Government work can, at times, be a little dry and boring. The Solar Prize was different. We incorporated an in-person pitch competition as the final component of the program. After submitting a written package that was reviewed in advance, the top 10 teams had 5 minutes to pitch to the prize judge and a panel of experts about why they should win $500,000. After a 1-hour deliberation, the winners were announced the very same day. For the Department of Energy, this was simply unheard of.

It was made possible by leveraging that horrible governance delay we faced in Round 1. Because we’d had to get practically every person in DOE comfortable with the first phase winners, and because only first phase winners were eligible to compete in later stages, we successfully argued that we already had approval to award funds to these groups. The later stages were just follow-on awards to what was already approved. This nuance allowed same-day review, selection, and announcement, which greatly assisted the winners.

As mentioned in Part 1, prize winners have stated the funds they receive are four times more useful than grant funds because of their immediacy and flexibility, and that the program was extremely motivating, pushing them to do far more than they could or would have done otherwise. This feedback goes directly from program participants to the DOE leadership who decide whether to fund future rounds. It creates an impact and support feedback loop that is hard to beat. The genuine joy and accomplishment shown in the below picture captures something you don’t typically associate with government funding programs.

Through six rounds from 2018 to 2023, the Solar Prize supported 140 teams with over $20 million in prizes and $5.9 million in technical support vouchers. Those teams collectively raised $300 million in follow-on funding and created 491 jobs. For a program that awarded $26 million total, that’s more than a 10x return in leveraged private capital.

This evidence enabled scaling. After Round 1, when other DOE offices asked if they should try a prize, we had a case study and metrics. The Solar Prize became the template. After Round 3, when we pushed to get prize authority formally delegated to lower levels, we had proof that prizes weren’t risky. We had run multiple prize rounds across several program offices. To date we are not aware of a prize winner doing anything inappropriate with the funds.

By 2020, prize authority was delegated down to office directors for prizes up to $10 million. This removed a massive bureaucratic barrier. The American-Made Challenge program expanded from a single $3 million Solar Prize in 2018 to over 100 prize competitions across multiple technology areas, awarding more than $188 million in funding by 2025.

That scaling happened because we could prove the model worked. And we could prove it because we’d designed impact measurement into the program from day one. The lesson: recurring programs force you to care about impact in a way that is difficult for one-off programs to replicate. One-off programs struggle to leverage learning. Recurring programs do.

Conclusion: A Prize is a Program, Not Just a Purse

In Part 1, we told the 13-year story of how prize authority at DOE went from dormant law to functioning tool. It didn’t result from a clean policy implementation. It was persistence from staff who held onto an idea after being told no, a rare alignment of political timing, and champions in leadership willing to spend political capital to try something new.

In Part 2, we walked through what happened after that approval. The 8-month slog to design the Solar Prize wasn’t just about picking prize amounts and writing rules. It was about building an entire ecosystem. The Ready, Set, Go structure addressed the motivational problem. The American-Made Network helped with the serendipity problem. The vouchers provided entrepreneurs access to cutting edge capabilities that weren’t available otherwise. The governance mapping (eventually) got us through the announcement problem. The recurring structure forced us to care about impact measurement in a way one-off programs don’t.

The success of the American-Made model wasn’t the mechanism itself. It was the design behind it. Capital alone is rarely enough. You need structure, support services, partners, timeline, and a way to prove it worked. Those prizes supported hundreds of teams who went on to raise hundreds of millions in follow-on funding and create thousands of jobs.

But that knowledge largely stayed within DOE. Each new organization running prizes, whether in government or the private sector, still has to figure most of this out from scratch. The craft of designing and deploying capital effectively is learned through apprenticeship. It takes years to understand not just the mechanisms, but the governance, the politics, the timing, and all the unwritten rules that determine whether a good idea becomes a real program. That apprenticeship model is slow, fragile, and dependent on the right people being in the right place at the right time.

We’re trying to document these lessons. The prize ecosystem needs a community of practice. The broader innovation funding ecosystem needs better coordination and shared learning. Innovation Waypoints is our attempt to share what we’ve learned and create space for practitioners to learn from each other.

If you’re working on innovation funding programs, whether in government, philanthropy, or the private sector, we’d like to hear from you. What are the challenges you’re facing? What lessons have you learned? What would help you do your job better?

Stay tuned for Part 3: When Not to Use a Prize

Innovation Waypoints is brought to you by Waypoint Strategy Group.