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Investors Rain Funding Down On Climate Prediction Startups

Illustration of gold coins falling.

For Himanshu Gupta, monitoring and predicting the weather isn’t about convenience — it’s a matter of survival.

Gupta grew up in a small town in India, a place in delicate balance with the weather. When a hot summer delayed the monsoon season, Gupta and his sibling hauled water from a river in five-gallon buckets. Even mildly strong winds downed power lines. And when oppressive heat melted the family’s wax candles into puddles in the evening, it was time to stop studying.

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“When you come out of that life you realize how much of that childhood you basically missed because you didn’t know what you were missing,” Gupta said, “and how much potential we could have unlocked for ourselves as kids.”

Gupta would go on to work in the planning department of India, where he noticed suicide among farmers happened en masse during periods of unpredictable drought or rain that destroyed crops and ruined farmers’ chances of repaying loans.

In 2017, he co-founded climate analytics platform ClimateAI with Max Evans, who came from a farming family in Ecuador.

Clearly, they had the right idea. Funding for weather and climate prediction startups soared from around $16.2 million in 2016 to $145.5 million in 2017, Crunchbase data shows. In 2021, that number skyrocketed to $541.6 million.

Climate change spreads to other sectors

As climate issues flood nearly every sector, climate and weather analytics startups are offering companies and consumers predictions about everything from the chances for inclement weather for that upcoming vacation to the long-term flood or fire risks of building new properties.

These data models are often more advanced than the weather forecasting services built into your phone — they use artificial intelligence along with a host of data points from satellites and radars to make real-time determinations. Housing developers use such climate analytics to determine where to build new developments. Retailers use it to forecast supply chain issues in apparel fabrics. And supply chain companies use climate de-risking platforms to improve speed and efficiency in global trade.

Apocalyptic weather the world over — from California droughts that caused wildfires so severe they drenched the state in smoke and turned the skies above San Francisco red to devastating floods in Pakistan that killed 15,000 people and displaced millions more — has made it abundantly clear: weather affects everything.

That means weather and climate intelligence startups — once confined to the agriculture, supply chain and energy industries — have expanded into nearly every sector, offering everything from analytics and prediction to climate de-risking.

And as the effects of climate change intensify, the volume of data produced and managed by these startups continues to grow. So do the stakes.

“Tomorrow there’s going to be every company on this planet Earth whose operations and supply chains will be impacted by climate change,” Gupta said. “And if they act on it, it will lead to not only increased profits for these companies, but also improved resilience for the communities they serve.”

More sectors get creative with climate tech

In 2016, some of the hottest weather-related startups were Big Terra, Nnergix and WaterView. Big Terra works with farmers worldwide to deliver climate analytics, while Nnergix caters largely to the renewable energy sector, and WaterView to city planning industries. These sectors often bear the brunt of climate difficulties. Changing water patterns or storms could mean shipping delays in building materials, or a season of crops suddenly dying.

Beginning in 2017, venture funding went to more climate-risk startups in insurance, property and travel. One Concern raised $22.6 million in Series A funding to help property developers understand climate-related risks to their buildings. raised nearly $20 million to help retail and sporting establishments use climate analytics to reduce energy expenses.

ClimateAI, which raised $22 million in April from Four Rivers Group, works with the agriculture, retail, defense and logistics sector to provide climate insights. That data can, for example, help manufacturing companies adjust shipping schedules to maximize efficiency during periods of good weather. It could also help wineries determine which areas will likely see more rainfall next season and plant crops accordingly.

And, despite facing difficult macroeconomic headwinds in 2022, weather intelligence startups saw their second-best funding year in a decade last year, netting $266.4 million in venture dollars, per Crunchbase data.

Climate ‘de-risking’ startups proliferate

Nick Cavanaugh grew up in Seattle, surrounded by snow-capped mountains and hiking trails. After getting his postdoc in climate science research and working at a hedge fund, he founded weather prediction platform Sensible Weather in 2019.

While many weather prediction platforms cater to supply chains, agriculture and defense, Sensible Weather, at the time, was one of the few climate de-risking products available for day-to-day consumers in the form of travel planning. Sensible Weather works with travel partners to provide travelers refunds if weather gets in the way of their skiing or camping trips.

“I wanted to get this idea of climate finance in front of people to say, ‘Hey, this is why it matters in your life.’ There’s still this disconnect between what climate change is and why it matters to me,” Cavanaugh said. “I can show you directly, like that vacation that you got rained out of last year.”

Jupiter Intelligence, a climate analytics platform, works with companies in the real estate industry to help them to plan for weather-related issues to homes or housing insurance plans. It can also provide those in the banking sector with insights on how climate change may impact portfolio assets.

“There’s going to be enormous unpredictability with extreme weather events, with droughts,” said Jason Pontin, an agtech-focused partner at venture investment firm DCVC. “AI-based systems can give much more predictive insight to what the likely risk ranges are.”

Climate tech: More than a weather forecast

The use cases for climate prediction technology are wide-reaching and easily scalable, which is why investors have poured money into it.

Many of the companies in the sector operate on a platform-as-a-service model with few product expenses, allowing the same climate data to be used for multiple purposes and sold to companies that are only now seeing the effects of climate change in their industries.

“Climate is changing and the world is changing,” Gupta said. “And there are people who are impacted who don’t even know they’re impacted by that.”

Illustration: Li-Anne Dias

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