The Ansari X PRIZE

The Ansari X PRIZE was a space competition in which the X PRIZE Foundation offered a US$10,000,000 prize for the first non-government organization to launch a reusable manned spacecraft into space twice within two weeks. It was modeled after early 20th-century aviation prizes, and aimed to spur development of low-cost spaceflight. The prize was won on October 4, 2004, the 47th anniversary of the Sputnik 1 launch, by the Tier One project designed by Burt Rutan and financed by Microsoft co-founder Paul Allen, using the experimental spaceplane SpaceShipOne. $10 million was awarded to the winner, but more than $100 million was invested in new technologies in pursuit of the prize.
The second X PRIZE, the Archon X PRIZE, was announced in October 2006 by the X PRIZE Foundation. The third X Prize, the Automotive X Prize, was announced shortly thereafter. The fourth X Prize, the Google Lunar X Prize, was announced in September 2007

Motivation
The X PRIZE was first proposed by Dr. Peter Diamandis in an address to the NSS International Space Development Conference in 1995. The competition goal was adopted from the SpaceCub project, demonstration of a private vehicle capable of flying a pilot to the edge of space, defined as 100 km altitude. This goal was selected to help encourage the space industry in the private sector, which is why the entries were not allowed to have any government funding. It aimed to demonstrate that spaceflight can be affordable and accessible to corporations and civilians, opening the door to commercial spaceflight and space tourism. It is also hoped that competition will breed innovation, introducing new low-cost methods of reaching Earth orbit, and ultimately pioneering low-cost space travel and unfettered human expansion into the solar system. The X PRIZE was modeled after many prizes from the early 20th century that helped prod the development of air flight, including most notably the $25,000 Orteig Prize that spurred Charles Lindbergh to make his solo flight across the Atlantic Ocean. NASA is developing a similar prize program called Centennial Challenges to generate innovative solutions to space technology problems.
Created in May 1996 and initially called just "X PRIZE", it was renamed "Ansari X PRIZE" on May 6, 2004 following a multi-million dollar donation from entrepreneurs Anousheh Ansari and Amir Ansari.

Contestants
Twenty-six teams from around the world participated, ranging from volunteer hobbyists to large corporate-backed operations:
Acceleration Engineering
Advent Launch Services
Aeronautics and Cosmonautics Romanian Association (ARCASPACE)
Armadillo Aerospace
American Astronautics Corporation
Bristol Spaceplanes, Ltd
Canadian Arrow
The da Vinci Project
Pablo de Leon & Associates
Discraft Corporation
Flight Exploration
Fundamental Technology Systems
HARC
IL Aerospace Technologies
Interorbital Systems
Kelly Space and Technology
Lone Star Space Access Corporation
Micro-Space, Inc.
PanAero, Inc.
Pioneer Rocketplane, Inc. (now Rocketplane Kistler)
Scaled Composites' Tier One project (Winning Team)
Space Transport Corporation
Starchaser Industries
Suborbital Corporation
TGV Rockets
Vanguard Spacecraft
Whalen Aeronautics Inc.
This contestant list notably did not include traditional space access companies like Boeing and Lockheed, which many in the industry believe to be incapable of replacing their present space transportation vehicles with low-cost alternatives. These critics claim as evidence the companies' several failed attempts to do so, such as the X-33 project, on contract from NASA and other U.S. government agencies. However, the X PRIZE Foundation itself did not ban these companies from applying, so long as they could prove their efforts on this project would be free of government funding.

Competition status
Representatives of the X PRIZE Foundation symbolically presented the ten million dollar prize to Burt Rutan and Paul Allen of Mojave Aerospace Ventures on November 6, 2004. The Ansari X PRIZE trophy is on the left.
The Tier One project made two successful competitive flights, X1 on September 29, 2004 piloted by Mike Melvill and X2 on October 4, 2004 piloted by Brian Binnie. They thus won the prize, which was awarded on November 6, 2004. (Note: the winning team is referred to by several names at various times: Tier One, Scaled Composites, and Mojave Aerospace Ventures.)
The trophy is currently on display in the St. Louis Science Center in St.Louis,Missouri.

Flight attempts by teams that did not win
Although only the Tier One team actually launched a spacecraft into suborbital space, several other teams have conducted low-altitude tests or announced future plans to launch into space:
The da Vinci Project originally announced that their first flight would be on October 2, 2004, but this was postponed indefinitely on September 23, 2004, as they were unable to obtain a few necessary components in time. They have not announced a revised timetable.
The Canadian Arrow team conducted a successful full-power engine test in 2005 and announced on June 2, 2005, that it had received permission from the Canadian government to use Cape Rich as a future launch site.
On August 8, 2004, Space Transport Corporation's Rubicon 1 and Armadillo Aerospace's test vehicle, in two separate unmanned test launches, both crashed and were destroyed.
On February 1, 2005, AERA Corporation (Formerly American Astronautics) announced its plans to send seven paying passengers into space as early as 2006, a full year before the first announced speculative Virgin Galactic flight.

List of major donors by order of donation
Anousheh Ansari and Amir Ansari
First USA (J.P. Morgan Chase), $1,000,000 USD
New Spirit of St. Louis Organization
Danforth Foundation, $500,000 USD
Tom Clancy, $100K–$500K
J.S. McDonnell (McDonnell Douglas)
Andrew Taylor (Enterprise Rent-A-Car)
Andrew Beal (Beal Bank)
St. Louis Science Center

Spinoffs
The success of the X PRIZE competition has spurred spinoffs that are set up in the same way. There have been two major spinoffs at this point, the first of which is the M Prize (short for Methuselah Mouse Prize), which is a prize set up by University of Cambridge biogerontologist Aubrey de Grey which will go to the scientific team that successfully extends the life or reverses the aging of mice, which would then eventually be available to humans. The second is the NASA Centennial Challenges, which consist of (among others) the Tether Challenge in which teams compete to develop superstrong tethers as a component to space elevators, and the Beam Power Challenge which encourages ideas for transmitting power wirelessly. An independent spinoff called the N-Prize was started by Cambridge Microbiologist Paul H. Dear in 2008, designed to foster research into low-cost orbital launchers.
The X PRIZE foundation itself is developing additional prizes, including one around genomics, and another around energy -- the Automotive X PRIZE. There is also a possible "H-Prize", focused on hydrogen vehicle research, although this goal has already been addressed by H.R. 5143, an X-Prize-inspired bill passed by the House of Representatives.
source: wikipedia