—Venture capitalists invested $269 million in 23 deals in the San Diego area during the last three months of 2011, according to the MoneyTree Report from the National Venture Capital Association, PwC, and Thomson Reuters. That was almost a 20 percent gain in dollars, but a 28 percent slide in deal count from MoneyTree data for the fourth quarter of 2010. For the full year of 2011, the MoneyTree VC survey said $829 million was invested in 104 deals in San Diego, a 5 percent decline in dollars and a 17 percent slide in deals from the $871.7 million sunk into 126 San Diego deals in 2010.

—What should students study now to be prepared for the workplace 10 years from now? We asked that question of 22 Xconomists, including San Diego Xconomists Ramesh Rao, Duane Roth, Drew Senyei, Larry Bock, and Robert Noble. We’ve compiled all 22 answers in an Xconomy special report on education, which you can find here.

—San Diego Gas & Electric hosted a grand opening of its new Energy Innovation Center, which is designed to serve as an energy innovation showcase and education facility, and to meet the U.S. Green Building Council’s requirements for a platinum LEED (Leadership in Energy & Environmental Design) certificate. The center includes a full commercial “food service demonstration kitchen” where San Diego chefs can test their recipes on energy efficient appliances and restaurant owners can learn about the advantages of new and more energy efficient equipment. Utility officials said Commercial kitchens are particularly energy intensive.

—San Diego-based Tealium raised $1.1 million in Series A financing from private investors, and plans to use the funding to expand development of the tag management technology the company created to help enterprise customers manage their online marketing. Tealium said the investors include Limelight Networks CEO Jeff Lunsford, former Visual Sciences CEO Jim MacIntyre, Collective CEO Joe Apprendi, EyeWonder CEO John Vincent, and eValue Group CEO Thomas Falk.

—After previewing their plans last year, the X Prize Foundation and San Diego-based Qualcomm Foundation officially unveiled the Qualcomm “Tricorder” X Prize, a competition offering $10 million to the team that can develop new wireless diagnostics technology. The winning entry must be able to accurately diagnose a set of 15 diseases across 30 consumers in three days, capturing real time, critical health metrics such as blood pressure, respiratory rate, and temperature, and providing information in a consumer-friendly way.

—Qualcomm’s leadership has been talking for several years about the anticipated competition between its ARM-based semiconductors and the CPUs developed for desktop computing in the expanding market for smart devices. Now some of those skirmishes are beginning. Illinois-based Motorola Mobility (NYSE: MMI)  said recently it would use Intel’s (NASDAQ: INTC) latest low-power x86 Atom processor in a number of future Motorola products, marking Intel’s opening move into the smartphone market. A Motorola spokeswoman told me by email, “We will continue to use multiple chip set vendors.” Qualcomm (NASDAQ: QCOM) already has hundreds of mobile devices using its Snapdragon processor, and has been working with manufacturers on hundreds more.

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Much of the action this week was taking place downtown, at the 6th annual Convergence Summit hosted by the nonprofit Wireless-Life Sciences Alliance. The three-day conference included CEOs, entrepreneurs, investors, executives, and innovators—and we’ve got the highlights of that and other area life sciences news wrapped up here.

—San Diego’s Qualcomm (NASDAQ: QCOM), the largest wireless chipmaker in the world, said during the summit that it’s helping the X Prize Foundation set the ground rules for a proposed $10 million Tricorder X Prize. X Prize organizers want a real-life medical tricorder—like the one Dr. McCoy used on Star Trek—that is portable, uses wireless sensors, and has the capability to rapidly diagnose patients better than or equal to a panel of board-certified physicians.

—Eric Topol, the Scripps Health cardiologist and director of the Scripps Translational Science Institute, said during his talk at the convergence summit that he wants to start a new medical school for tech-minded students in San Diego. Topol says medical students should be learning how to handle new wireless technologies and genomics in their practice. Topol was instrumental in founding the Cleveland Clinic Lerner College of Medicine in 2002.

—Exton, PA-based ViroPharma (NASDAQ: VPHM) agreed to pay San Diego’s Halozyme Therapeutics (NASDAQ: HALO) as much as $83 million to license Halozyme’s recombinant human hyaluronidase. ViroPharma wants to develop the Halozyme compound as an experimental injection medication for a rare genetic disorder that causes potentially life-threatening swelling.

—San Diego’s Meritage Pharma said its experimental drug for a little-known condition called eosinophilic esophagitis (EoE) passed a mid-stage clinical trial of 71 children. The study found … Next Page »

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Some big names were on the agenda yesterday at the 2011 Convergence Summit, which is being held in a downtown San Diego hotel under the auspices of the nonprofit Wireless-Life Sciences Alliance. A couple of the speakers actually delivered some interesting news:

—Qualcomm (NASDAQ: QCOM) chairman and CEO Paul Jacobs made the first unexpected announcement from the stage during a keynote talk yesterday morning, when he revealed the San Diego wireless giant has been collaborating with the X Prize Foundation to establish guidelines for a $10 million Tricorder X Prize. The underlying concept of the $10 million challenge is to develop a rapid, portable, and low-cost diagnostic tool capable of diagnosing patients better or equal to a panel of board-certified physicians. It’s an idea right out of Star Trek, which I’ve explained in more detail here.

—Following Jacobs onstage was Eric Topol, a cardiologist and director of the Scripps Translational Science Institute, who revealed he plans to start a new medical school in San Diego sometime next year. Topol didn’t provide many details during a conversation with Qualcomm executive Don Jones, who has been driving the company’s multi-pronged foray into wireless health technologies. But he vented somewhat, describing the medical establishment as “sclerotic and fossilized” and “very resistant to change.”

Topol, who founded the Cleveland Clinic Lerner College of Medicine in 2002 (four years before he joined Scripps in San Diego), is clearly looking to do things differently. He said only a few medical schools are using iPads and are teaching students how to use the Vscan, a handheld ultrasound imaging device that General Electric introduced in 2009. “Medical schools today offer nothing about wireless technologies or genomics,” said Topol, who indicated the medical school he is planning would emphasize the adoption of the latest technologies. While Topol sounded hopeful, he acknowledged that the process of starting a new school is “really difficult” and requires going through years of approval.

—One speaker did not make news in the usual sense. A talk by Jonathan Sackner-Bernstein, associate director at the FDA Center for Devices & Radiological Health was billed in the program as “a view into the agency’s oversight of wireless health devices, applications, and services.” But Bernstein didn’t provide much insight into the agency’s slow regulatory process or reasoning for asserting regulatory authority over a broad spectrum of emerging technologies.

Bernstein reminded the audience, which included more than 200 technology entrepreneurs and healthcare executives, that it was 20 years before the cell phone played a meaningful role in a physician’s daily activities and 22 years before surgeons began to use Thomas Edison’s lightbulb to illuminate their operating rooms. In other words, have patience restless wireless health entrepreneurs. It takes decades to adopt new technologies in healthcare.

WLSA CEO Rob McCray and InTouch Health Robot with the FDA's Jonathan Sackner-Bernstein

Bernstein’s presentation itself was the real news, and something of a distraction. The FDA official did not appear personally on stage, but instead used a medical telepresence robot from Santa Barbara, CA-based InTouch Health. Bernstein operated the RP-7 robot remotely from the East Coast, and his visage was limited to the robot’s 15-inch display screen. I was of two minds after Bernstein ended his talk and the robot rolled offstage and down a ramp—the audience watching apprehensively. While it was disappointing that Bernstein didn’t appear personally, it was nevertheless encouraging to see a top FDA official use remote telepresence technology to deliver his presentation without a hitch. And it also meant the agency didn’t have to pay for his trip.

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Qualcomm (NASDAQ: QCOM) chairman and CEO Paul Jacobs revealed today that the San Diego-based wireless technology giant has been working with the X Prize Foundation to develop criteria for a new $10 million X Prize grand challenge that is straight out of Star Trek—a “Tricorder X Prize.”

The idea—which is still being distilled—is to offer a $10 million incentive prize to the team that can develop the first diagnostic device that actually works like the ubiquitous medical tricorder of Star Trek fame. Generally speaking, the technology would have to be portable, use wireless sensors, be minimally invasive, and capable of providing rapid, low-cost diagnoses of medical ailments and injuries. Oh, and organizers also want the gadget to be able to diagnose patients better than or equal to a panel of board-certified physicians.

Jacobs announced the proposal during a keynote speech this morning at a wireless health conference in downtown San Diego. The X Prize Foundation officially announced the collaboration in a statement issued at about the same time from its headquarters near Los Angeles.

The X Prize Foundation gained worldwide renown as the organizer of the $10 million prize for the first reusable civilian spacecraft. X Prize founder Peter Diamandis issued the challenge in 1996, and a team led by famed aerospace designer Burt Rutan—with financial support from Microsoft co-founder Paul Allen—won the $10 million prize in 2004.

“Part of prize development is to bring something to reality, but part of it also is to change the mindset,” said Jessica Ching, the foundation staffer who is responsible for developing the rules governing the competition. In the case of the X Prize for spaceflight, Ching says the Rutan-designed SpaceShipOne shattered the prevalent notion that only government-backed spacecraft could reach for the stars.

Spock with Tricorder

In a similar way, the Tricorder X Prize is intended to break the grip of conventional thinking in healthcare by extending the reach of health information and services to more people. “Health is important to everybody,” Ching said. Creating the prize, she added, “came from a real need and a desire to push for change.”

For now, however, the more immediate challenge lies in establishing the ground rules for a fair competition.

“It’s got to be really difficult, but not impossible,” said Ching. She estimated that developing guidelines for the Tricorder X Prize would take about six months—a process that Qualcomm is funding—and the foundation would likely formally announce the challenge sometime next year.

“What we have to do is take general characteristics and turn them into an objective set of criteria,” said Don Jones, Qualcomm’s Vice President of Business Development for Health and Life Sciences.

Ching, who also was attending the Wireless-Life Sciences Alliance Convergence Summit in San Diego, said that developing a portable medical diagnostic tool would require innovations across many technologies, including medical imaging, microfluidics, and wireless sensors. It also would likely require radical advances in such fields as artificial intelligence and decision systems.

In its statement today, the X Prize Foundation says, “This prize will bring understandable, easily accessible health information and metrics to consumers on their mobile devices, pointing them to earlier actions for care.” Or, as Qualcomm’s Paul Jacobs put it during his talk, “Imagine a future where the tricorder is just another app on your phone.”

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“In the Obama Administration, entrepreneurs are welcome.” So said Aneesh Chopra, chief technology officer of the United States, in a keynote speech yesterday at “DC to VC,” a summit on healthcare IT investing organized by Morgenthaler Ventures partner Rebecca Lynn in San Francisco and co-sponsored by Silicon Valley Bank and Venrock. Speaking to a group of venture capital partners, entrepreneurs, and media representatives at the posh St. Francis Yacht Club, Chopra argued that under Barack Obama’s leadership, the federal government is doing more than ever before to adopt the latest infotech innovations coming out of Silicon Valley, and to shape federal regulation to encourage entrepreneurial solutions to big challenges like improving public health and nutrition.

I had a chance to delve into the specifics of the administration’s pro-entrepreneurship policies with Chopra in a one-on-one interview after his speech (see below). But the big picture, for the charismatic New Jersey-born son of Indian immigrants, is that the government sorely needs the ideas of its citizens—especially programmers—and that it can best stimulate those ideas by making the government’s vast troves of data more accessible to outside developers, and then getting out of the way to see what they build.

As a case in point, he cited the story of Dave Augustine, Bob Burbach, and Andrew Carpenter, three developers from San Francisco-based non-profit WestEd Interactive who came up with a new way to search the antiquated Federal Register as part of the Sunlight Foundation’s “Apps for America” contest. “The Archivist of the United States found out about Bob and Dave and Andrew in March, and said, ‘You guys have built the best killer app I’ve seen, can you rebuild the Federal Register website?’ and they said, ‘Sure,’” Chopra recounted. The new FederalRegister.gov, launched this summer, makes it easy to browse the once-impenetrable collection of government notices, rules, procedures, and documents by topic or date. “These were just random dudes who didn’t have lobbyists or procurement departments, but just smart ideas—’cognitive surplus,’ as Clay Shirky would say.’”

President Obama named Chopra as the nation’s first CTO in April 2009. As an associate director within the Office of Science & Technology Policy, Chopra’s formal assignment was to work with chief information officer Vivek Kundra to set federal technology policies that would make government more efficient and more transparent. “The goal is to give all Americans a voice in their government and ensure that they know exactly how we’re spending their money,” the President said when he appointed Chopra.

But Chopra has gone far beyond that initial charge, becoming known as an outspoken advocate for making government databases more accessible to developers of consumer software applications, using open source software more widely within government, and spurring innovation through prize-based competitions. Obviously, those are all causes dear to the hearts of most private-sector innovators and entrepreneurs, and Chopra has become a popular figure in Silicon Valley and other innovation hubs. Even before joining the Obama Administration, Chopra, the former secretary of technology for former Virginia Governor Tim Kaine, had been labeled a “venture governmentalist” for his efforts to invest in high-risk internal technology projects. Bay Area technology guru Tim O’Reilly has gone so far as to call Chopra a “rock star,” saying that he “understands that government technologists need to act more like their counterparts in Silicon Valley.”

In his speech at the Morgenthaler summit, Chopra gave numerous examples of the way the Obama Administration is opening government data to entrepreneurial uses. One was the Apps for Healthy Kids competition, a part of First Lady Michelle Obama’s campaign to reduce childhood obesity; the winners of the contest, which challenged entrants to create computer games or tools that make “fun and engaging” use of USDA nutrition data on 1,000 commonly eaten foods, were announced by the White House last month. Chopra said the developer of “Smash Your Food,” one of the winners of the $60,000 competition, got so excited about the power of software to help people eat better that he … Next Page »

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Recently, the X Prize Foundation awarded a total of $10 million to three companies at the forefront of building the world’s most efficient cars. It was the culmination of a competition that began in 2008 with 111 teams and was pared down to nine finalists. The competition was rigorous: it demanded teams to engineer and design cars that get at least 100 miles per gallon on average and survive grueling real-world safety, emissions, durability and range tests.

The goal of the X Prize Foundation is visionary—to show us how small, innovative car companies can lead the way toward creating highly efficient cars that will transform the way we use energy and dramatically reduce our dependence on fossil fuels.

As I listened to members of the winning teams talk about the competition and the challenge, they focused not just on the specifics of the engineering task that was in front of them, but more importantly on the implications for society. They want to fundamentally change the game—to change the way we look at cars in order to have an impact on the big picture issues of creating new economic and environmental opportunities in this country.

The nonprofit X Prize Foundation, with its theme of “Revolution Through Competition,” is representative of a new mindset that focuses on the intersection of engineering and technology to solve seemingly intractable problems.

In early October, on the campus of the University of Southern California, X Prize CEO Peter Diamandis will join a group of scientists, policy makers, educators, entrepreneurs, business leaders and communicators who will converge at the National Academy of Engineering (NAE) Grand Challenges Summit to discuss real-world solutions to some of the most pressing and complex issues of our time.

The summit is part of a bold movement in the world of engineering—two years ago, the NAE launched the idea of 14 Grand Challenges in Engineering. The grand challenges are ultimately tied to fundamental societal needs and priorities: sustainability, vulnerability, health, and the joy of living. They cover a wide spectrum of issues—making solar power more economical, providing access to clean water, engineering better medicines, preventing nuclear terror, securing cyberspace and restoring and improving the urban infrastructure, among others.

The grand challenges are encouraging us to tackle issues surrounding the environment, healthcare, and technology, issues that clearly interest professional engineers and issues that will inspire future engineers. We are in a new era in which engineers and technologists work with their counterparts from other disciplines to understand relevant problems, help classify and analyze them, understand the constraints, and help design solutions that will address these problems.

During a time when we see gridlock in the world of politics and experience the uncertainty of a stubborn and difficult economic recession, there is still great potential to actually solve pressing societal issues.

At the X Prize event, there were a host of luminaries from the political world who acknowledged this gridlock and called on innovators to lead the way. U.S. Senator Mark Warner from Virginia, where the Edison2 team based in the town of Lynchburg captured the $5 million X Prize for mainstream vehicles, voiced the sentiments many Americans share.

“We need a few more real engineers,” Warner said. “These are the next great innovators who will lead our country forward.” I could not agree with him more.

I believe that engineering can empower society by creating new tools, devices, methodologies, and ways of thinking, of innovating and communicating. Removing constraints and outside the box thinking are fundamental qualities of the best engineers, and I believe the results of this kind of thinking will be a fundamental driver in technological and societal change.

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Members of the Boston innovation community poured into the Microsoft New England Research and Development Center recently to celebrate the release of Mastering the VC Game, a book by Flybridge Capital Partners general partner Jeff Bussgang that shines a light on the inner workings of venture capital and details what it takes for entrepreneurs to court and pitch venture investors and win financing. Now, we are pleased to announce that we have 25 copies of this essential book for entrepreneurs to give away to the next 25 people who purchase Saver Rate or Startup Special (our discounted price for entrepreneurs and those who work at startups) tickets to XSITE, the Xconomy Summit on Innovation, Technology, and Entrepreneurship. Our all-day innovation extravaganza will take place on June 17 at Babson College in Wellesley, MA. Register and (hopefully) secure your book right here.

What better fit for Jeff’s book than one of New England’s biggest summits on innovation and entrepreneurship. Close to 50 representatives from the New England innovation community and beyond are taking part—from a slew of startup entrepreneurs to public company executives to leading VCs and angel investors. Keynote speakers include Peter Diamandis, chairman and CEO of the X Prize Foundation; Rod Brooks, whose startup Heartland Robotics is out to reinvent how factory workers do their jobs; Alkermes chairman and CEO Richard Pops; and Bob Metcalfe, the Polaris Venture Partners partner and Ethernet inventor who has made a mission of promoting clean, super-abundant next-generation energy technologies.

Other speakers include Steve Hall, managing director of Vulcan Capital, Paul Allen’s venture arm; Eric Giler, CEO of wireless power startup WiTricity; and Adelene Perkins, President and CEO of Infinity Pharmaceuticals. You can find the entire list of confirmed speakers at the XSITE registration page, where you can also take advantage of the Saver Rate. And we will close off the day with the XSITE Xpo, where a dozen new startups will be strutting their stuff, with you, the audience, choosing your favorites.

We look forward to seeing you there. But even if for some reason you can’t make it to XSITE, you should get Jeff’s book. Its full title is: Mastering the VC Game: A Venture Capital Insider Reveals How to Get from Start-up to IPO on Your Terms. Legendary investor Brad Feld of TechStars calls it “the definitive book on how venture capital works.” We really appreciate Jeff making it available for us.

Register now for XSITE for a chance to get it free of charge. See you at the summit!

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The Rocket Racing League game coming to the iPhone, iPod Touch, and iPad early this summer is a rare beast: a futuristic video game that’s based on real life.

RRL Games, a wing (or should I say fin?) of the Orlando, FL-based Rocket Racing League, is expected to release its game for the iPhone and iPod Touch this month and for the iPad in June. Judging from previews, it’s a high-octane simulation of the even higher-octane real-world sport of rocket racing, in which pilots fly four-seat, delta-wing airplanes modified with rocket engines that burn liquid oxygen and ethanol.

Rocket racing, which CNN reporter Miles O’Brien has called “a mashup between Stars Wars pod racing and NASCAR,” is the co-creation of investor Granger Whitelaw and X Prize Foundation founder Peter Diamandis, who will give a keynote presentation at the Xconomy Summit on Innovation, Technology, and Entrepreneurship (XSITE) on June 17. Their Rocket Racing League organization raised a $5.5 million venture round last year to advance its vision of a rocket racing circuit that would take place at airfields around the country, with fans watching military, acrobatic, and test pilots competing in four-lap heats around a 5-mile raceway.

The league is recruiting teams for the competitions now, and the first races are tentatively planned for 2011. But meanwhile, eager fans will be able to experience rocket racing on their Apple mobile devices. In screen shots from the game, rocket planes zoom through course markers that define the race course—essentially virtual tunnels in the sky. In actual rocket races, pilots will have heads-up displays showing them much the same information, and fans will be able to watch their progress from the ground on jumbotrons running augmented-reality software. (You have to watch this video from a demonstration in Tulsa, OK, to fully grok this.)

The organization says that eventually, it would like iPhone- or iPad-toting spectators to be able to race virtual planes alongside the actual ones in real time. But that’s a ways off. In the nearer term, gamers will be able to use the apps to compare race times with their friends on Facebook, as Diamandis explained in the following e-mail interview.

Xconomy: Do you hope that the rocket racing video game will help to generate increased interest in rocket racing as a real-world sport?

Peter Diamandis: In the development of any business, especially a sports league, it’s vital that we give our fans as many ways to get involved and be a part of the action as possible. The RRL game allows our fans to design and pilot their very own … Next Page »

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Most Xconomy events last only an afternoon or an evening. Barely enough time, in other words, to scratch the surface of all the amazing work technology entrepreneurs are doing around New England, in areas as varied as cloud computing, health IT, mobile commerce, smart grid technology, and the future of drug development. But our flagship annual conference, the Xconomy Summit on Innovation, Technology, and Entrepreneurship (XSITE), is different: it’s a chance to gather for a full day with leading innovators and investors from New England and around the country and hear all the details on what they’re doing to turn ideas into great businesses.

We’re pleased to announce that registration is open for this year’s edition of XSITE, which will be held for the first time at Babson College in Babson Park, MA (that’s next door to Wellesley, for those of you not up to speed on your suburban geography). Neighboring Olin College joins Babson as co-host of the event, and we couldn’t ask for a more appropriate venue, given the focus at Babson and Olin on entrepreneurship and engineering that meets real social and economic needs.

Babson president Leonard Schlesinger, a nationally celebrated leader in the field of entrepreneurship, will be on hand to help us kick off the event, and we’ll also hear from keynote speakers like Peter Diamandis, chairman and CEO of the X Prize Foundation, who knows a lot about igniting entrepreneurship and innovation. Other featured speakers will include Rod Brooks, whose startup Heartland Robotics is reimagining the way factory workers do their jobs; Alkermes chairman and CEO Richard Pops, a national leader in biotechnology; and Bob Metcalfe, the Ethernet inventor who has made a mission of promoting “enertech” or the idea of clean, super-abundant next-generation energy technologies. We’ve posted the whole list of confirmed speakers, who already number almost 30, over at the XSITE registration page, where you can buy a ticket to XSITE at our “super saver” rate until April 29.

The theme for XSITE 2009, last June, was “The Recovery Starts Here.” We planned all of our keynote talks and panel discussions around creative ideas from New England tech and life sciences companies for lifting the country out of recession. The theme this year, “Building the Next Economy,” grows directly out of the 2009 conference—but with a crucial difference.

There’s no question now that economic recovery is underway, though it’s been slow to show up in some parts of the country, like Xconomy’s newest home city, Detroit (from whence we’ll have at least one speaker). What’s important now, as we head into this century’s second decade, is the choices we make about the kind of economy we really want. Will it be based on rusty, outdated, and wasteful approaches to energy generation, transportation, healthcare, communications, and consumer-goods manufacturing? Or will it be built around new ideas like using advanced 3D design and prototyping technologies to streamline product development, putting IT and modern communications technologies to work remove the excess costs from patient care, and managing the electric grid and our homes and offices to extract hidden efficiencies?

Obviously, we have a bias here—because we believe, at bottom, that technological progress is what drives exponential growth (that’s where the X in Xconomy comes from, after all) and that innovation is the straightest way out of the economic doldrums and toward a solid, sustainable, rewarding economy.

In addition to our plenary sessions, we’re expanding the conference this year to include four breakout tracks. Three will be the same as last year: Life Sciences, Energy, and Information Technology. The new track will be focused, like our just-announced new channel, on Health IT.

And, like last year, we’ll close out the formal sessions with a raucous XSITE Xpo, a rapid-fire series of presentations by 12 startups in life sciences, energy, and infotech with the audience voting on their favorites. An evening networking party will follow, naturally.

We’ll provide a lot more details about the conference agenda over the coming weeks…but we hope you will sign up early for what’s sure to be 2010′s most XSITE-ing celebration of innovation and entrepreneurship.

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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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Fourteen years after Peter Diamandis proposed the idea of creating the X Prize to spur development of low-cost spaceflight, San Diego-based Prize Capital said today it has entered the final phase of creating a $10 million prize to encourage advances in algae biofuels technologies.

As part of the final planning process, Prize Capital founder and chairman Lee Stein convened a workshop of 26 leaders to draw up rules and other criteria for what Stein calls the $10 million Algae Fuel Prize. The group met for much of the day at UC San Diego’s Scripps Institution of Oceanography, and Stein told me during a break he had invited venture investors, scientists, environmentalists, and business and government leaders from across the country. But he was not willing to say how long final planning will take before the competition will be unveiled.

“I don’t know how much more work will be needed,” Stein said. “You can’t change the rules after you start.”

In announcing the algae fuel prize, Stein cited the historic success of prize competitions, including Charles Lindbergh’s first flight across the Atlantic Ocean and the $10 million Ansari X Prize. The X Prize was claimed in 2004 by acclaimed aerospace designer Burt Rutan, whose project was supported by Microsoft co-founder Paul Allen.

Stein acknowledges that significant government and venture funding already is flowing to develop commercial fuels from algae. But he said creating a prize competition provides an added incentive by stimulating additional research and by attracting worldwide public attention to specific aspects of a problem. For Stein, that means calling attention to the energy needs of the developing world, which represents the fastest-growing source of carbon dioxide emissions. He said there are billions of people in developing countries “who are living on a $1 a day—and if they get a second dollar, it goes to buy fuel.” Stein hopes that fuels derived from algae, which absorbs carbon dioxide before it is harvested for fuel production, can become a cheaper and cleaner alternative to burning wood, coal, and dung in developing countries.

Prize Capital’s announcement is the culmination of work that began more than a year ago, Stein said, when initial planning began at the Washington Renewable Energy Conference. “We started by deciding we would do something that focused on energy and the environment,” Stein told me. Over time, he expanded the number of people involved in the process and gradually settled on developing a biofuels prize based on algae.

Prize Capital’s planning for the competition must be both meticulous and comprehensive because the Algae Fuel Prize also represents the first application of Prize Capital’s alternative venture funding model. Under this model, Prize Capital provides working capital to select teams that enter a competition as a way of providing financial leverage so teams of all sizes have sufficient resources to actually develop innovative technology.

In the algae competition, Prize Capital proposes to:

—Create a prize focused in an area that has been fully vetted, so that the competition can both accelerate innovation and create investment opportunities.

—Form a master limited partnership to fund teams.

—Reach agreements with teams that accept funding that include terms for subsequent investment rounds as competitors succeed in advancing their technologies.

—Allow teams to opt out of the investment rights.

Investors will own a percentage of equity in all direct competitors supported by Prize Capital. The firm says its investment model mitigates risk and enables investors to share in the success of multiple companies beyond the competition by spurring the development of commercial applications from multiple teams, and not just the winner.

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Can competitions and prizes get you to the Moon? Google thinks so—it’s backing the $30 million Lunar X Prize, which will be awarded to the first privately funded team that sends a remote-controlled robot to the Moon, drives it 500 meters, and collects video of the trip. Back here on Earth, the $10 million Archon X Prize is being offered to the first team that can build a device that sequences 100 human genomes in 10 days or less, and the Wellpoint Foundation is proposing a $10 million Healthcare X Prize for the first organization that figures out how to deliver a 50 percent improvement in the cost-effectiveness of community healthcare over a three-year period. Right here in the Boston area, Waltham, MA-based InnoCentive is using the prize model to attract solutions for dozens of problems, ranging from improving the fire resistance of polyurethane foam to accelerating the growth of soybean shoots.

But in Glastonbury, CT, there’s a company called TopCoder with a prize-based business model that predates all of these efforts. It’s using the model to create products that are arguably more relevant to our economy in the short term—better software applications. And it’s doing it for far less money; first-place winners rarely take home more than $3,000.

Companies like AOL, ESPN, Ameriprise, Ferguson, Geico, and LendingTree have outsourced thousands of software development projects to TopCoder’s worldwide freelance community—”from something as simple as a Web page all the way up to full-blown enterprise resource planning (ERP) systems,” in the words of company founder and chairman Jack Hughes.

The model is so successful that it’s attracting the attention of business scholars from Harvard, MIT, and other academic centers. “They’re creating enterprise-class software projects in a highly distributed setting, and for me that was an order of complexity that I wasn’t expecting,” says Karim Lakhani, an assistant professor at Harvard Business School who has written two papers about TopCoder.

You might wonder why the competition model attracts any willing participants, considering that competing takes a lot of work, and that the big money is usually reserved for the top-placing teams, while everyone else gets zilch. Indeed, I’ve always wondered whether giant prize programs like the X Prizes are an efficient way for a society to array its resources—just look at the 26 organizations that collectively invested more than $100 million competing for the $10 million Ansari X Prize. All but one of the teams walked away with nothing after Burt Rutan’s SpaceShipOne won the prize in 2004.

But TopCoder has invented a system that seems to work, both for its clients and for its community members. For one thing, the company never bought into the winner-take-all concept. For each competition, the company sets the dollar amount of the first-prize award based on the size of the job and the amount the client is willing to pay. TopCoder sets aside about half as much for the second-prize winner. The third-, fourth-, and fifth-place winners don’t get cash, but they do get points—and everyone gets paid later out of a general prize pot based on how many points they’ve accumulated.

“We wanted to avoid the problem of people submitting and always coming in third and never getting paid,” says Hughes. While it’s standard practice elsewhere in the software business to offshore software development to the cheapest available labor pool, “We just weren’t interested in that,” says Hughes. “We were more interested in … Next Page »

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Paul Allen just got a new addition to his Flying Heritage Collection of vintage aircraft. Yesterday, the Paine Field facility in Everett, WA, held a media event in which the museum hoisted a full-scale replica of SpaceShipOne to the ceiling. Just thought Xconomy readers would be interested to see these photos (courtesy of Jennifer Bragg and Adrian Hunt).

SpaceShipOne was funded by Allen and received the $10 million Ansari X Prize in 2004 as the first low-cost, civilian, manned spacecraft launched into suborbital flight (to an altitude of around 100 kilometers). The craft, and its replica, were built by Mojave Aerospace Ventures and Scaled Composites. The original ship is on display at the Smithsonian in Washington DC.

Back in August, Luke took a tour of the Everett hangar facility, which opened to the public last June. It looks like the SpaceShipOne replica will feel right at home, as it is placed near the collection’s ME-163, the world’s first operational rocket-propelled aircraft—an inspiration to the design team of SpaceShipOne.

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Is it just me, or have ultracapacitors somehow become the latest hot and mysterious alternative energy technology?

Just a few weeks ago, my Xconomy colleague Greg Huang reported that Seattle startup EnerG2 landed $8.5 million in venture funding to develop a new class of ultracapitors that use nanocomposite materials to store energy. Before that, Light Electric Vehicles of Eugene, OR, announced that EEStor, a secretive company in Cedar Park, TX, would supply ultracapacitors next year for LightEV’s two- and three-wheel vehicles. Then I noticed that one of three finalists in a $25,000 contest organized on YouTube to solicit ideas for a new “Energy X Prize” was a proposal to create a new storage medium—an “ultracapacitor.”

This fascination may be due to the fact that the technology is akin to catching lightning in a bottle—literally. An ultracapacitor is an electronic device used to store electrical energy. It can charge and discharge electricity almost instantaneously, albeit at low voltage, hundreds of thousands of times without being depleted.

Now it just so happens that a San Diego company called Maxwell Technologies (NASDAQ: MXWL) has been developing ultracapacitors for the past 15 years. So this flurry of recent announcements left me confused. Doesn’t the technology needed to make ultracapacitors already exist?

So I arranged to talk with David Schramm, the CEO at Maxwell, which has been manufacturing ultracapacitors for commercial customers for the past seven years or so. And I asked: What do these recent announcements mean? Is the big breakthrough in ultracapacitors yet to come?

“I have a hard time shadow-boxing against some of these things, I don’t know where to start,” Schramm says. “It’s one thing to write on a piece of paper what you’re going to do, and it’s another thing to work with people who have actually done it.”

Maxwell, which was founded as a government R&D contractor in 1965, inherited its expertise in ultracapacitors from working on power sources for pulsed lasers at the Lawrence Livermore National Laboratory. Maxwell decided to focus on developing ultracapacitors for commercial markets in the early 1990s, as defense spending plunged in the years following the dismantling of the Soviet Union. But making money from ultracapacitors has been a challenge for Maxwell, and the company has been continually reinventing itself for the past 10 or 15 years.

One problem, Schramm says, is that the industrialized world … Next Page »

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Twenty-two teams of aspiring automakers, including Carlsbad-based Aptera, have registered so far to compete for $10 million in prizes offered as part of a “Great Race” to develop super fuel-efficient vehicles, the Progressive Automotive X Prize said today.

Aptera, which began development of a futuristic-looking three-wheel passenger car five years ago, is among the teams that have registered to compete in two dramatic, long-distance stage races scheduled for next year, X Prize spokeswoman Carrie Fox said. The $10 million purse is split between the alternative class and a mainstream class that requires entrants to operate cars with four-doors, 4-wheels and other basic features.

The contest is open to teams building vehicles that are capable of reaching the marketplace, not concept cars or science projects. That means each team must have a business plan that shows a capability for producing 10,000 vehicles, Fox said. Guidelines for the contest also include a new yardstick for measuring MPG, the miles per gallon standard that has been, um, distorted by the conventional auto industry. The new standard is MPGe—or miles per gallon equivalent—which summarizes a vehicle’s energy efficiency even if it’s not burning gasoline.

Aptera was founded about five years ago by Steve Fambro, who wanted to design and build a safe, comfortable passenger vehicle that was more fuel-efficient than anything on the road. The company, which says its first prototype gets 230 miles to the gallon, has raised about $24 million in venture funding from investors that include Idealab and Google.

Progressive Insurance gained naming rights for the Los Angeles-based Automotive X Prize by agreeing to put up the prize money, Fox said. Details about entries from the Pacific Northwest are available on Seattle Xconomy here.

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The Automotive X Prize in Los Angeles announced today it has chosen its first 22 teams to compete for $10 million in prizes that will be awarded for developing super fuel-efficient vehicles (100 miles per gallon or equivalent is the nominal goal). Among this first wave of contenders are three Northwest teams: Bellingham, WA-based Avion; Kinetic Vehicles, based in Cave Junction, OR; and the Vehicle Research Institute at Western Washington University in Bellingham.

—Avion has built an aerodynamic, diesel-powered, ultra fuel-efficient sports car. The company is led by Craig Henderson.

—Kinetic Vehicles has developed MAX, a turbocharged diesel-powered roadster. Its fuel comes from petroleum, biomass, or straight vegetable oil. Jack McCornack leads the operation.

—Western Washington University’s Vehicle Research Institute (VRI) has developed a series of cars called Viking, which run on gasoline, electricity, or biomethane and compressed natural gas. The VRI was founded by Michael Seal in the 1970s and is now headed by Eric Leonhardt.

The Automotive X Prize, which is sponsored by Progressive Insurance, will kick off its competition next year, holding stage races in several cities. More than 100 additional teams have signed letters of intent to compete so far, according to the X Prize website. The winners are expected to be announced in 2010. “The technologies reflected in this first wave of Registered Teams are as diverse as the teams themselves, and we look forward to hearing more about their individual ideas in advance of the 2009-2010 stage race competition,” said Julie Zona, director of team development and relations for the Automotive X Prize, in a statement.

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Updated (see below): A student group at MIT’s Sloan School of Management has been named one of three national finalists in a contest seeking YouTube video proposals for the creation of a new X Prize in Energy and the Environment, the X Prize Foundation announced today.

Jonathan Dreher’s 2-minute proposal, “Energy X PRIZE: Reduce Home Energy Usage,” notes that renewable energy technologies could have a big effect on our energy future by increasing the supply of energy. However, he notes, “This approach is already getting plenty of attention and may not benefit from a prize for additional incentives. The other, often forgotten way, is to reduce our demand for energy.” And, as Dreher notes, “Unlike a technology-based X Prize, every American can participate.” He claims that a $10 million prize focused on energy conservation could have a $1 billion impact.

(Update, Nov. 17: I finally reached Dreher, who noted first off that he worked with two fellow students, Jeremy Stewart and Michael Norelli, on the proposal. All three are in a dual-degree program that will garner them a Sloan MBA and a master of science in engineering systems from MIT. Neither Steward nor Norelli was mentioned in the X Prize release.)

The X Prize Foundation, of course, is famous for its huge prizes that address key technology and innovation challenges. In 2004, a Burt Rutan-led team financed by Microsoft co-founder Paul Allen won the $10 million Ansari X PRIZE for suborbital spaceflight. Since then, the foundation has created the $10 million Archon X PRIZE for Genomics, the $10 million Progressive Insurance Automotive X PRIZE, and the $30 million Google Lunar X PRIZE. The foundation and its partner, BT Global Services, are now in the process of developing prizes in Space and Ocean Exploration, Life Sciences, Education and Global Development, and, of course, Energy & Environment.

Which is what the Crazy Green Idea Contest is all about. The contestant whose video garners the most votes before the end of this month stands to take home the $25,000 top prize. And, according to today’s announcement, their Crazy Green Idea will be “explored as the next X PRIZE in Energy and the Environment.”

In addition to Dreher’s proposal, the other two finalists (out of 133 submissions—does that sound low to anyone?) were:

—Alan Silva, from Roy, UT. His idea, The Energy Independence X PRIZE, is described as: “A prize to develop energy-independent homes that exist completely off the grid.”

—Kyle Good, of Irvine, CA: His concept, The Capacitor Challenge, centers on development of “a new storage medium, an ‘ultra-capacitor’.”

We’ve embedded all three proposals below. You can find all the finalists and vote for your choice, here.

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Jim Benson, an impatient visionary and aerospace entrepreneur, died today of a brain tumor, according to a statement issued by SpaceDev, the San Diego-based company he founded.

SpaceDev developed the hybrid rocket engine used to power SpaceShipOne, the Burt Rutan-designed spacecraft, in its historic 2004 suborbital flight, which won the $10 million Ansari X-Prize. Benson, who was 63, resigned from an operational role at SpaceDev two years ago, but retained a seat on the board.

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A prize for a prize. That’s essentially the reason a trio of heavyweights—Ray Kurzweil, Xconomist George Church, and Saul Griffith—will be on hand at MIT this afternoon, as they help announce a $25,000 prize for whomever comes up with the best idea for a $10 million energy and environment prize to be awarded by the X Prize Foundation.

More specifically, the $25K will be offered for the best YouTube video proposal for the big kahuna energy prize. The contest itself will be formally announced at a forum called “Seeking Radical Breakthroughs in Alternative Energy—What I Would Advise the Next President,” which will be held at 4:30 this afternoon in MIT Building 34, room 101 (you can find a few more details here).

The competition for the $25K prize should be tough. In addition to tapping various experts and its public YouTube call, the foundation is hosting the X PRIZE Lab @ MIT, a class this fall that focuses on the energy and environment sector. According to a press release, “The semester-long X PRIZE Lab class is asking students to conceive potential X PRIZEs that could help solve aspects of global warming and resource depletion. Last semester, the X PRIZE Lab @ MIT focused on healthcare. Students in the class proposed a Tuberculosis (TB) Diagnostics X PRIZE that would have the potential to save more than 1.6 million lives per year. The TB Diagnostics prize proposal was awarded a grant and is now being developed into an official X PRIZE.”

Here are the guidelines for your YouTube video submissions.

The winning video must answer the following three questions:

1. What is the specific prize idea?

2. What is the Grand Challenge or world-wide problem that you are trying to solve?

3. How will this prize benefit humanity?

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Government Considers X Prizes for Nanotech

Big prizes for technological innovation are becoming all the rage in Washington. Ars Technica tells us that Republican Senator Olympia Snowe of Maine and Democratic Senator Ron Wyden of Oregon have introduced a bill to fund prizes for advancements in nanotechnology. They’re hoping the fund will attract money from private investors as well.

U.S., EU Promote Open Internet Worldwide

Policymakers in both the United States and the European Union are pushing for laws to promote free expression and privacy on the Internet in countries like China. On its Policy Beta blog, the Center for Democracy and Technology, which supports the idea, says Jules Maaten of the EU Parliament and Republican Congressman Chris Smith of New Jersey have gotten together to discuss how they could push their Global Online Freedom Acts.

In Shaky Economy, Net Bartering Grows

With credit markets tight and consumers having less cash to spend, a number of companies are turning to the Internet for a different way to do business-bartering goods and services. The New York Times reports that about 450,000 companies are involved in barter networks, and companies are popping up to handle the transactions. One barter company executive tells the paper that bartering is a good way to conserve cash.

Obama Pushes Cyber Security

The Bush administration hasn’t done enough to combat cyber-espionage and other online crime, Democratic presidential candidate Barack Obama says. In a speech at Purdue University, Obama said he’ll make network security a top priority, and appoint a National Cyber Advisor, according to Wired.

Scientific Society Publication Proposes Debate on Human Role in Global Warming

The editors of Physics and Society, the newsletter of a division of the American Physical Society, want to have a public debate on whether human activities are contributing to global warming, or whether it’s a natural phenomenon—and they are kicking off the debate with the publication of both a pro and a con article in the online publication. One of the editors, Jeffrey Marque, writes that “there is a considerable presence within the scientific community of people who do not agree” with the conclusion that human activity is the most likely cause of warming. [Editor's note: A previous version of this item failed to say that the views of the Physics and Society editors do not necessarily represent those of the American Physical Society, and erroneously implied that the APS itself wanted to foster the debate.]

Economy Darkens Outlook for Home Solar Power

The lack of easily available credit for homeowners could stifle the market for residential solar power systems, an industry expert warns. Earth2Tech reports that David Arfin of solar power company SolarCity (Foster City, CA), says lenders are toughening requirements for loans to install the systems. Without the credit crunch, he says, more systems would likely be installed.

DOE, Dow Collaborate on Ethanol Production Process

Dow Chemical and the National Renewable Energy Laboratory, part of the Department of Energy, are jointly developing a thermochemical process that will convert biomass to ethanol and other chemical products. Green Car Congress says the process will heat biomass to produce gases, which a process from Dow will then convert into various alcohols, including ethanol. The project intends to show whether this can be done on a commercial scale.

Elder Statesmen Warn of “Energy Tsunami”

A long-term energy crisis threatens the security of future generations if some action isn’t taken soon, a bipartisan group of 27 elder statesmen are warning. The Associated Press reports that the group sent an open letter to both presidential candidates and every member of Congress. The letter came from Henry Kissinger, Colin Powell, six other former secretaries of state or defense, as well as former senators and cabinet officers from both parties.

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