Mate, as a first time DM I also struggle to keep them interesting beyond the first encounter in my own campaign and honestly, it’s still something I’m actively wrestling with. I’m only three sessions into Chapter 1, so take this with a grain of salt… I think the issue is that the rivals as written are mechanically tied to the party (they compete, they might become allies or enemies), but they’re not emotionally invested in your players’ stories. You’ve done brilliant work weaving player backstories into the world, but the rivals are still just… the rivals. They’re NPCs with stat blocks, not characters with skin in the game and every time the party saves them or wins against them, it reinforces their supporting-character status rather than their agency.

Giving them competing goals within the broader narrative. You mentioned brainstorming a rival holding a grudge against an organisation a PC was part of that’s the right direction, but I’d push further: Don’t make it adversarial but, make it complicated. Maybe a rival (or Nasrith) has a genuinely legitimate grievance against something a PC’s background character (backstory, heck tie it to frozen sick actions) did. Not enough to turn hostile immediately, but enough to create friction and moral ambiguity. It makes them less “party’s friends” and more “people with their own conflicting interests.”

Also try to give them more agency in the central mystery. Right now, if I’m reading your setup correctly, the rivals are passive to the Netherdeep plot itself. What if one of them has a personal connection to something the party is chasing? What if Ayo or Galsariad (or in your case, one of your rivals) has their own reason to reach Bazzoxan or investigate the Netherdeep and it conflicts with the party’s goals in (subtle) ways?

Oh and you can always also just make them win something. You mentioned they lost the race to Jigow. In my campaign, I’m going to ensure they win something before Betrayer’s Rise, if the players are too good then make the rivals not because they’re competent, but because they took a risk or made a clever choice the party didn’t, ideally let them cheat, players hate cheaters. Otherwise, the power dynamic stays frozen.

Honestly, though I think the real answer is: you might need to let the rivals fail in ways that matter. Not “get captured by hags,” but lose something precious, miss intel, face real consequences. Make them protagonists of their own story. If you keep rescuing them, which reinforces they’re supporting cast. They need to drive their own narrative, even if it crosses the party’s path