[Editors note: Revises and corrects the terms of QPrize convertible note funding]

When San Diego-based Qualcomm Ventures announced it was organizing a new international prize competition last May, the economy was already reeling and the venture capital industry had slammed on the brakes.

That slowdown in VC activity—especially for early stage startups—was probably the key factor in the company’s decision to set aside $550,000 in incentive funding for finalists in the “QPrize” competition, according to Nagraj Kashyap, who heads Qualcomm Ventures. With the Aug. 21 deadline for “QPrize” applications drawing near, Kashyap agreed to meet with me to discuss the business plan competition and the corporate venture arm, which usually maintains a relatively low profile here.

Nagraj Kashyap

Since Qualcomm (NASDAQ: QCOM) launched the venture arm nine years ago, it has provided funding for about 30 startups around the world, with investments typically ranging from $500,000 to $10 million, and from Series A to Series C rounds. Kashyap says the fund’s managers look for startups that provide both a strong potential for return on investment and that complement Qualcomm’s existing products and services. Its investments include lithium battery developer A123 Systems of Watertown, MA, video game console maker Zeebo of San Diego, and remote blood pressure monitor startup Triage Wireless in San Diego.

Kashyap says Qualcomm Ventures’ foray into organizing a business plan competition “all started when we saw this precipitous drop in venture funding, which hurts the early stage guys disproportionately.” An additional source of seed-stage funding won’t change the prospects for some startups, such as semiconductor design companies, because the capital costs are so high these days. But Kashyap says seed funding can make a big difference to … Next Page »

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Although the financial meltdown has hit San Diego’s venture community pretty hard, Lux Capital’s Larry Bock says he made his most-successful investments during the biotech nuclear winter of the early 1990s. So what areas of venture innovation seem promising today? That’s what Xconomy is here for, my friends. Read on.

— Serial healthcare entrepreneur James Sweeney sees a wave of innovation coming in the field of wireless healthcare, and it might be worth listening to what he has to say. As Xconomy’s Juha-Pekka Tikka reported, one of the eight healthcare companies he founded was CardioNet, which is now regarded as the first commercially successful wireless health company in the United States. Sweeney will discuss his vision for wireless healthcare this Thursday morning at the Convergence Summit organized by San Diego’s Wireless Life Sciences Alliance at the Estancia La Jolla Hotel & Spa.

—For a company locked in a proxy fight, San Diego’s Amylin Pharmaceuticals (NASDAQ: AMLN) did a good job last week of showing it doesn’t need billionaire investor Carl Icahn to cut its costs or to advance new drug products. Amylin said Monday it plans to lay off 200 sales reps, or 11 percent of its global workforce, as part of a sales reorganization. On Tuesday, the diabetes drug developer said it had submitted a new drug application to the U.S. Food and Drug Administration for exenatide, its once weekly drug for type 2 diabetes.

—The price of shares in Acadia Pharmaceuticals (NASDAQ: ACAD) more than doubled on Monday, when the San Diego biotech said it stands to get as much as $395 million in milestone payments from Biovail, Canada’s largest publicly traded pharmaceutical. Acadia’s stock lost some of its altitude through the week, closing at $1.81 a share on Friday, after trading above $2.60 a share Monday. Acadia has scheduled a conference call this afternoon to discuss its Q1 financial results and drug development programs.

—San Diego’s Vical (NASDAQ: VICL) said it is nearly ready to begin producing a prototype vaccine for the H1N1 influenza, aka swine flu . In a Q1 conference call Thursday, Vical CEO Vijay Samant said the company should be ready to start making vaccines this week that are suitable for clinical trials. “We are talking of production time of six to nine weeks rather than six to nine months with conventional vaccines,” Samant said.

—Spectrum San Diego is ready to introduce its CarScan technology next week at the Force Protection Equipment Demonstration conference in Stafford, VA. Spectrum’s founding CEO Steven W. Smith, who is an expert in digital signal processing and ultra-low level X-ray emissions, told me the car-scanning technology he developed produces clearer images of interior compartments by combining two different types of ultra-low level X-ray emissions. Motorists can remain in the car while it’s being scanned.

—Reva Medical, which got $42 million in venture capital in 2007 after clawing its way back from near death when the market for its metal stent collapsed, is preparing to move to human studies of its fully dissolvable cardiac stent. CEO Robert Shultz told Xconomy’s Denise Gellene the clinical trial will likely include 300 to 500 patients and take two … Next Page »

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Joining in the latest wave of funding innovation, San Diego’s Qualcomm (NASDAQ: QCOM) today launched a new international business plan competition called the QPrize.

In a short announcement, the wireless chipmaker said its corporate venture fund has created a pool of $550,000 to provide early stage funding to the most-promising plans submitted by entrepreneurs “who can accelerate wireless technologies in key business sectors.”

Qualcomm Ventures will select a semi-finalist from China, India, Europe, and North America. The four semi-finalists will each receive $100,000 in funding and an invitation to Qualcomm Ventures’ CEO Summit in San Diego in November to compete  for a Grand Prize. There are no entry fees, but Qualcomm’s rules require participants to pay for their own travel and accommodations.

Qualcomm says the winner of the final QPrize competition will get an additional $150,000 in convertible note funding.

History is replete with examples of cash prizes that were used to spur innovation. One of the most-notable success stories was a series of prizes established by the British government in 1714 for a method that could precisely calculate the longitude of a ship at sea.

The X Prize, which was created in 1996 and awarded in 2004, has revitalized the practice. Peter Diamandis, who created the $10 million X Prize to stimulate the development of technologies capable of taking ordinary people into space, has said he was inspired by the $25,000 Orteig Prize that Charles Lindbergh claimed in 1927 with his solo flight from New York to Paris. The U.S. government even joined in, with the Pentagon sponsoring a contest to develop autonomous robotic vehicles.

In Qualcomm’s case, the company appears to be using its QPrize as part of its broader strategy to proactively seed its proprietary technology across various markets. By stimulating the creation of new companies, especially in China and India, the wireless giant can broaden its sphere of influence by creating a business ecosystem that shares the same technology.

[Xconomy San Diego Editor Bruce V. Bigelow contributed to this report]

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