About: STAGES OF THE INNOVATION CHALLENGE
APPLY. ADVANCE. AWARD. ACHIEVE.
Each competition cycle of the AIC – spring and fall of each year – is highly competitive and will take place in four defined stages:
First Round: All interested companies will download an application, complete it in accordance with specific guidelines and upload their entry into the ACA’s electronic system that is used for evaluation and administration of the competition. Applications may be available for download prior to the start of the submission window, which will remain open for approximately 30 days. First round submissions are then screened for basic eligibility requirements and may also be screened on the basic merits of their business plan. The ACA has full discretion in making final decisions regarding a company’s eligibility or ability to continue in the competition. Once all of the applications are screened and evaluated during the evaluation period, which may take as long as 5 to 7 weeks, applicants will be able to review feedback online (using private login information created during the submission process). Applications that did not meet eligibility criteria, or may not have been deemed to be competitive enough to successfully continue, will be so notified. The logistics of the screening and evaluation process will be influenced by the pool of judges and the number of applications received.
Note: The ACA recognizes that it takes time and commitment for companies to participate in the Arizona Innovation Challenge. Applying companies should be committed to follow through on all phases of the Challenge, should they be selected to continue in a given round. However, should a company make a decision to not participate in a subsequent phase for any reason, a representative should inform the ACA immediately, providing ample time to consider a replacement company.
Semi-Finalist Round: Upon the completion of the evaluation period, judges will select approximately 25 semi-finalists to continue into the semi-finalist round. Once the semi-finalists have been identified, they are given the opportunity to provide a more detailed business plan and proposal, with significantly more information than was required for the first round. Semi-finalists are given approximately 2 to 3 weeks to submit that application, upon which a specific panel of “final judges” will evaluate those entries during an approximate 2-week period. The final judge panel will then select between 10 and 15 finalists to enter the finalist round. Companies selected as semi-finalists may also be given the opportunity to participate in the ACA’s Venture Ready mentor program.
Finalist Round: The finalist round of the AIC involves those finalists using their semi-final business plan submissions as a basis to create and make a live presentation and “pitch” to the final judge panel. The pitch format involves an initial presentation by the finalist company, followed by an interactive period whereby the judges provide feedback and/or ask questions to further clarify and evaluate the company’s proposal. After the finalists have executed their pitches, which may extend a few days, the final judges will evaluate, discuss and select the companies that they recommend to receive the final grant awards. The CEO of the ACA will ultimately name the winners of the Challenge based on judge recommendations. After a significant, multi-month process, the ACA will announce the winning companies and award individual grant money.
Fulfillment and Commercialization: The final stage of each Challenge competition culminates in the winning companies using their award funding to commercialize or scale their product or service over the following 12 months. AIC grant funds should be viewed as working capital tied directly to furthering the business – such as capital expenditures, sales/marketing activities, or hiring new people – and may generally not be used to pay for administrative and overhead expenses, or to compensate existing executives or employees. During this fulfillment and commercialization phase, specific negotiations occur between each winning company and the ACA to agree on the individual milestones that must occur in order to receive the full award funding via defined tranches over the 12-month period, typically on a quarterly basis. These milestones and funding details will be contractually finalized and tracked over time by the ACA for compliance. The Agreement signed by winning companies and the ACA will obligate the company to various terms of compliance for a total of 5 years, which goes beyond just the performance period related to achieving milestones and receiving all the grant funding. This compliance includes reporting the company’s achievement of key business metrics, allowing onsite visits by ACA personnel, and facilitating the review of key documents as needed. In the spirit of proper stewardship of the awarded funds, if a company does not fully complete its periodic milestones after the initial upfront payment, the ACA may either withhold funding completely or release only an apportioned amount of funds until the company has completed the proper milestones. Winning companies will usually never be given the full award amount upfront. There will also be certain “clawback” clauses that will come into play to discourage certain activities by winning companies that would be counter-productive for the state of Arizona – to include, but not be limited to, moving the company’s operations out of the state, or being acquired by a company which moves the operations out of state and/or does not comply with reasonable reporting requirements. Additionally, since start-up and early stage companies have certain risk profiles and many variables to their success, their award contracts with the ACA will allow for a certain degree of flexibility of execution – especially in cases where unforeseen variables can come into play that could jeopardize the potential success of the original contract. It is also a requirement that winning companies be screened for qualifications in the Venture Ready mentoring program. If qualified, the ACA has the authority to place winning companies with an ACA Venture Ready Entrepreneur in Residence to coordinate mentoring.