'This is all very unfortunate...' Multiple semi-finalists ‘regretfully’ withdraw from XPRIZE competition following mid-contest rule change
The $15m global XPRIZE initiative - backed by title sponsor ASPIRE, the technology program management arm of Abu Dhabi’s Advanced Technology Research Council - was launched in December 2020 and comes with a top prize of $7m, and 2nd and 3rd place prizes of $2m and $1m respectively.
It challenges applicants to produce “structured chicken breast or fish fillet alternatives that replicate or outperform conventional chicken and fish in access, environmental sustainability, animal welfare, nutrition and health, as well as taste and texture.”
A bonus prize of $2m will go to a team that develops a whole animal-origin-free growth media at the lowest production cost; $500k will go towards the 31 semifinalists’ costs; while the remaining $2.5m will be split between up to 10 finalists, who will be announced after a tasting in Abu Dhabi in early February, with the three winners set to be revealed in early 2024.
‘We cannot participate with ROFRs, licensing restrictions, and other restrictive language being proposed’
Last summer, the semifinalists were informed of a proposed rule change whereby ASPIRE would have a 90-day Right of First Offer (ROFO) on any investment offer a participating team might receive, prompting some contestants to pull out immediately.
Following opposition from multiple contestants, the proposed rule change was then slightly revised.
However, in a letter to XPRIZE organizers sent in September 2022 and seen by FoodNavigator-USA, multiple semi-finalists including Eat Just, WildType, and The Better Meat Co said the revised version of the proposed rule (which one source told us defined the ‘Title Sponsor’ as any United Arab Emirates government owned entity) would still inhibit their ability to quickly close rounds and license their technology.
According to the letter, the revised rule – while having a narrower scope - would still give the title sponsor ROFR (right of first refusal) “over future investments, acquisitions, and exclusive licenses on our technology… In short, we’re open to XPRIZE’s sponsor having the right to participate in our future investment rounds, but we cannot participate with ROFRs, licensing restrictions, and other restrictive language being proposed.”
One industry source told us on Thursday: “I’ve just learned today that XPRIZE informed the teams that there will be no rules change beyond the Sept ’22 revisions.”
‘I would imagine a number of other venture-backed companies (or companies that want to be venture-backed) will withdraw…’
Several semi-finalists contacted by FoodNavigator-USA on Thursday afternoon confirmed that they would be pulling out of the competition, although they did not want to comment on the record.
One said he anticipated several other venture-backed companies - or companies that want to be venture-backed - would withdraw, although he stressed he remained supportive of the XPRIZE initiative as a force for good.
Another company that has withdrawn from the competition told us: "This is all very unfortunate, as all of us in the industry greatly applaud and support the mission of XPRIZE and appreciate that they are bringing global PR exposure to this critically needed sector.
"I was so excited initially at what they were trying to accomplish, and hopefully they will resurrect this at some future time but have a much more organized and informed approach."
One contestant added: "I can't speak to the XPRIZE rules, but I can say the best innovation competitions I've participated in have no strings attached."
'The terms are untenable'
Another contestant told us added: "The 90-day ROFO applies not only to investment offers but also to any commercial licensing arrangement. As you can imagine, for a B2B company whose entire business model relies upon licensing, such terms are untenable and will require us to withdraw from the competition.
"As a B2B company, we rely upon licensing for commercialization and cannot allow any one entity ROFO every time we engage a potential customer, not the least because multiple prospective customers expect our full discretion and do not wish for their work in cultivated protein to become public yet. Further, 90 days is a long time for any sort of first right and would significantly impede our ability to move quickly to close investment funds, secure customer contracts."
‘The XPRIZE participant agreement poses an undue burden on a company that will be fundraising over the next few years’
One of the startups dropping out - AQUA Cultured Foods – which has developed an innovative approach to creating whole cuts of seafood using fungi – told us: “Unfortunately, the XPRIZE participant agreement poses undue burden on a company that will be fundraising over the next few years by requiring a right of first that extends over a prohibitively long timeframe.
“This requirement negatively impacts a startup’s ability to raise capital and grow efficiently. These concerns have been formally submitted to XPRIZE counsel. However, no acknowledgment or attempt to modify the agreement to address the concerns of venture backed companies has been made.
“As such, we’ve declined to sign the agreement and we regretfully withdrew from the competition. It’s such a shame since our collective mission is so crucial to the betterment of our global community."
XPRIZE: 'Several semifinalist teams have made the difficult decision to withdraw'
FoodNavigator-USA has reached out to ASPIRE for comment.
XPRIZE chief marketing officer Jennifer Haslip sent us the following statement: "The XPRIZE Feed the Next Billion launched when there was limited activity in alternative protein options. The challenge will create new pathways for environmentally sustainable alternative meat products to meet consumer demand. The competition has already made a big impact on investment and innovation in alternative protein, particularly for fish and chicken.
"Several semi-finalist teams have made the difficult decision to withdraw from the competition but we are proud of their progress thus far and look forward to their continued innovation in the development of alternative proteins. In addition, we are sad to see any team drop out and will continue to support them through our alumni program. We’re confident this competition will lead towards a more sustainable world."
Asked how many of the 31 semi-finalists remained in the competition, she said: "We have 20 teams left in the competition, with six confirmed to compete in February in Abu Dhabi."
