100,000 Miles to Find, Fund, & Grow the Best Startups

A wild idea less than three years ago now spans more than 50 cities worldwide to find, fund, & grow the best startups.

Two years ago, most big pitch competitions seemed to be all about finding the next great Silicon Valley idea, whether it was having your laundry done for you or sharing a snarky secret about someone. The pitch competitions then were neither global nor uncovering particularly inspiring ideas.

We wanted to shake up the startup world. So, we launched Challenge Cup to find the most impactful startups around the globe and create valuable experiences for them.

Since then, Challenge Cup has been to over 100 cities worldwide. No wonder people thought we were crazy when just four months after launching the first 1776 campus, we announced the pitch tournament and our international incubator network, Startup Federation.

Although people thought we were absolutely insane, from 1776’s perspective, the Startup Federation and Challenge Cup were the most obvious next steps after we launched. While our headquarters is in Washington, D.C., the startups we want to find, fund, and grow are not just at home but everywhere.

The mission of 1776 is to change the world for the better through enabling innovative startups in industries that matter: education, energy, sustainability, health, transportation and cities, among others. The vision has always been a global revolution. So, we decided to forge ahead and make Challenge Cup a reality.

Now, as Challenge Cup is in its third year, let’s take a look back and then a look ahead. What have we learned through our journey? Are we finding big startup ideas or just inspiring stories? How have we evolved the Challenge Cup to get closer and closer to finding the best startups that are tackling our world’s biggest challenges, wherever those startups happen to come from?

Challenge Cup 2014

Inspirational stories or smart investments?

The first year was an experiment with a splash of fake-it-until-you-make-it. We traveled to 16 cities around the world — eight in the U.S. and eight abroad. In each city, we engaged a Startup Federation partner to host a two-day boot camp for invited local startups operating in education, energy, health, and smart cities. On the final evening, we hosted a competition and identified the best startup in each industry in that city.

Once we completed all sixteen cities, we brought the 64 winners back to Washington, D.C. for a global competition that would serve as the centerpiece of the Challenge Festival, a week long program full of events, receptions, and other fun. As a cherry on top, the prizes for the global winners would be investments from a venture fund that we were raising.

That first Challenge Festival was incredible. Bringing together 64 startups from around the world, making them the rock stars of a festival, and having them compete against each other was awesome.

Washington, D.C. responded to the Challenge Festival with unbridled excitement. Each event drew a larger crowd than the last, culminating in a packed house for the final competition at the U.S. Institute for Peace, looking out over the Lincoln Memorial. All told, we had more than 6,000 people attend at least one event during that first Challenge Festival in June 2014.

The overall winner of Challenge Cup 2014 was HandUp from San Francisco, along with seven other inspiring startups that finished first or second in each category: EduCanon, Lingau.ly, CancerIQ, MediSafe,Water Lens, Mellowcabs, and PlugSurfing.

Some of the Challenge Cup 2014 winners celebrate on stage together.

One of the interesting questions from that first Challenge Cup though was whether the competitors were merely inspiring stories or would in fact prove to be strong potential investments. For 1776, the question was not purely academic; we were actually putting our limited partners’ money behind 1776’s belief that you could find amazing, successful startups tackling big problems anywhere in the world.

More than two years have passed since then, and we have a lot more data to assess how that class of winners is performing.

In the inaugural Challenge Cup, 1776 had more than 600 startups apply to participate. We chose 368 to compete. From those 368 competitors, 64 came to the Challenge Festival. So far, 33 of the 64 global finalists have raised seed capital, totaling a staggering $33,567,030 in seed capital raised to date.

Many of the global finalists raised significant seed rounds shortly before or after the Challenge Festival in June 2014, while others continued working on their businesses before finally raising significant seed rounds 12 or 18 months later.

The Series A venture rounds raised by Challenge Cup 2014 finalists also serve as testimony to their momentum. Of the 33 startups who raised significant seed rounds, 14 have gone on to raise a total of more than $60 million in Series A capital. While 12 of those startups are U.S.-based, one is in Tel Aviv, and one is in Beijing.

Finally, two of the Challenge Cup 2014 global finalists have been acquired. Daimler acquired RideScout less than six months after the Challenge Festival while Renaissance Learning acquired UClass within a year.

Challenge Cup 2015

Another trip around the globe for even bigger returns

After the success of the first Challenge Cup, we took what we learned to improve the second annual Challenge Cup. Again, 1776 traveled to 16 cities but went to fewer U.S. cities than the year before to highlight the international focus of the competition.

We also broadened some of our industry categories: energy evolved into energy and sustainability, and smart cities grew into transportation and cities. Otherwise, the formula for Challenge Cup 2015 looked the same as that of 2014, and 1776 set off on another world tour.

The results for Challenge Cup 2015 were even stronger than the year before. Challenge Cup 2015 saw more than 1,000 startups apply to participate, an increase of more than 65% from the previous year. We chose 451 to compete. Of the 451 competitors, 1776 hosted 80 for the global finals at the Challenge Festival, as we added 16 wildcard spots to the 64 winners from the 16 cities.

The winner of Challenge Cup 2015 was Twiga Foods, an m-commerce startup from Nairobi that’s working to make food supply chains in Africa radically more efficient. The other winning startups were LearnLux, Cognotion, Handsfree Learning, Radiator Labs, BaseTrace, Unima, ReliefWatch, and EverCharge.

The Challenge Cup 2014 winner presents the prize trophy for the Challenge Cup 2015 winner.

Since Challenge Cup 2015, 35 of the 80 global finalists have each raised seed capital, totaling $20,796,000, so far. Similar to the year before, many of the global finalist startups are still raising seed capital.

As Challenge Cup 2015 is more recent, the global finalists are just starting to raise Series A capital. Of the 35 who have raised significant seed capital, two have raised Series A financing, totaling $5.2 million. One of those startups is based in New York City, U.S. and the other in Dublin, Ireland.

Challenge Cup 2014 and Challenge Cup 2015 followed essentially the same script, but something kept gnawing at us. While 16 cities felt like an awful lot of travel for those of us wandering the world on red eye flights, 1776 was still only seeing a small fraction of the most impactful, promising startups across the globe.

Then, the question for Challenge Cup 2016 was: how can 1776 really unearth the best of the best from the whole world, or as much of it was we could reasonably hope to cover with finite resources?

Challenge Cup 2016

Expanding global reach, industry categories, and potential for prizes

The 1776 team arranged for incubator and entrepreneurial partners in over 50 cities worldwide to produce their own Challenge Cup Local competitions. For each of the 50-plus cities, 1776 provided the scripts and promotional support and is now flying the Local winners to compete at nine Challenge Cup Regional programs. Each of the Regional programs look more like mini Challenge Festivals than our previous city competitions and include additional programming and valuable meetings for competitors instead of the original pop-up boot camps.

Beyond open sourcing Challenge Cup 2016, we also expanded the industry categories again. We’ve added security, money, and food on top of education, health, energy, transportation, and cities. With more categories, we simplified the judging process. The Challenge Cup Local judges pick the best startups competing — regardless of sector — rather than identifying a winner in each category. At the end of the day, we want to find the most promising startups, regardless of industry.

The results from the Local round have been fascinating and inspiring. We accomplished 1776’s goal of significantly broadening Challenge Cup’s reach around the world. Based on current trends, 1776 expects to have more than 3,000 startups apply to compete in Challenge Cup 2016 (up from over 1,000 in 2015) and will have more than 1,500 participate (up from 451 in 2015).

The fascinating part wasn’t that we got more cities involved. What is fascinating is that our Startup Federation partners around the world have truly taken ownership of the Local programs. We created Slack channels for the Local organizers to ask questions, share ideas, and solicit feedback from each other and 1776.

Beyond anything we could have foreseen, the Local organizers have challenged each other, each city actively trying to out-do the ones before, with banter flowing in from different time zones around the world. We have had the privilege of watching a real global community of startup organizers form organically.

The first hint we saw of the global community that would come to be was from Challenge Cup Local Montreal, the very first city of Challenge Cup 2016. Notman House — 1776’s partners in Montreal — produced a great program, and the pictures they posted from it were unreal…

Challenge Cup Local Montreal took place in a refurbished cathedral!

YES Philippines, 1776’s partners hosting Challenge Cup Local Manila, took the production to a new level. The organizers printed giant boarding passes for their winners to represent their trips to compete at Challenge Cup Regional Tokyo. YES Philippines shared those pictures with everyone on Slack, and many Local events since then have imitated and furthered that idea.

The YES Philippines boarding-pass awards have become a phenomenon.

The 1776 Challenge Cup hosts have also taken creative licenses with the content we provide them. Many of the organizers have localized the template website images, Facebook pages, videos, and signage, all of which is meant to introduce Challenge Cup, cover pitch coaching, and more, for their own audiences.

One of our favorite mashups so far came from our friends in Harare at iZone Hub, which gave 1776’s images a uniquely Zimbabwean spin.

iZone Hub localized 1776 materials to fit Harare.

As the Challenge Cup Local round gives way to the Challenge Cup Regional round, additional startup hubs in new cities continue to reach out to host their own Challenge Cup Local programs. Thinking about just how much of the world Challenge Cup 2017 will cover is amazing.

After two Challenge Festivals worth of experience, 1776 further improved the prize structure. Previously, the prizes were $650,000 in investments from 1776’s fund, spread across eight winners. However, we found the original prize structure presented a few challenges.

Primarily, in each of the first two years, there were incredible startups that deserved to win but weren’t necessarily fit or at least for 1776’s fund. We want to avoid tensions between between rewarding awesome startups and meeting fiduciary responsibilities to our limited partners.

Furthermore, completing detailed due diligence on an investment within the structure of a broad global competition is impractical. The prize has always been contingent upon full due diligence, which can feel like a letdown to winners inexperienced in the due diligence process.

Therefore, Challenge Cup 2016 is giving $175,000 in no-strings-attached cash grants to the global winners. Additionally, 1776 has allocated $1 million from its fund to invest in global finalists. The new prize structure will give us the flexibility to reward the best startups tackling our world’s most important challenges while also funding the startups with the most promising investment opportunities. In some cases, startups might fall into both of those prize categories.

A truly wild idea less than three years ago exploded into a program that now spans more than 50 cities and supports startups that have raised more than $120 million in capital to date. Through Challenge Cup, we get to watch startups from Boise to Bangalore working on innovation that matters.

1776’s cofounder and Co-CEO, Donna Harris, is getting ready to start the Regional round at Challenge Cup Regional Mexico City on Jan. 14 before I head to the west coast for Challenge Cup Regional San Francisco. Hopefully, we’ll see you in San Francisco, New York, Dubai, Tokyo, Nairobi, Singapore, London, or Tel Aviv!