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As The Planet Heats Up, So Does Investment In Weather Startups

Illustration of polar bear on a shrinking iceberg. [Dom Guzman]

Chatting about the weather may be the most famous form of small talk. But don’t be fooled: No one thinks this is trivial stuff.

In reality, we are all obsessed with the weather. And in the age of climate change, when bizarre meteorological phenomena occur with ever-greater regularity, there’s good reason.

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As Labor Day weekend beckons, a Western heat wave is setting records, with Death Valley temperatures predicted to peak around 125 degrees.

Meanwhile, elsewhere on earth:

  • A third of Pakistan was underwater this past week in the wake of historic monsoon flooding.
  • Europe is facing its worst drought in 500 years, as rivers dry up, crops wither and wildfire risks intensify.
  • China’s worst heatwave on record has stretched over 70 days, bringing drought and rolling blackouts to some of its largest cities.

Scientific studies indicate that extreme weather events such as heat waves and large storms are likely to become more frequent or more intense with climate change, per the Environmental Protection Agency. This points to a future in which we will all compulsively watch weather forecasts, fretting about whether we’re more at risk of melting in the heat or being carried off in a storm surge.

What’s that got to do with startups?

Now that we’ve spent some time talking about the weather, you may be wondering: How does this all relate to startups, money and the kinds of things Crunchbase News usually covers?

As it turns out, weather is a rising theme among funded startups lately. A sampling of investment in the space unearthed at least 23 companies with weather-focused business models that have raised funding since last year.

Collectively, those companies, listed below, have pulled in around $880 million to date:

It’s a varied assortment—with everything from satellite network operators to reinsurance underwriting tools. Most share a unifying theme however, around the notion the status quo tools of weather and weather-risk forecasting are woefully inadequate to meet the challenges going forward.

A large share of funded companies are selling forecasting and analytics services to insurance companies and other verticals preoccupied with risk management. Given the complexities of climate and weather variables, it’s often not something that can be done in-house.

“Actuarial science is not the same as earth science,” said Caribou Honig, a partner at SemperVirens Venture Capital, who focuses on the insurtech space. “Some types of risk analysis may be outside the expertise of traditional underwriters.”

Gauging risk from the sky and sea

In particular, insurers aren’t typically in the business of operating satellite networks, drone fleets and other infrastructure-heavy data collection technologies.

Such endeavors are more the realm of startups. A case in point is one of the largest weather-related funding recipients, Saildrone, which is known for its hurricane-tracking surface drones. The Alameda, California-based company has raised $190 million to date for its sea drones, which provide data for climate, mapping and maritime security use cases.

Satellites are also a big area for startup investment., which is launching a weather satellite constellation equipped with radars and microwave sounders, has raised over $180 million to date. The Boston company was even on the brink of going public via SPAC before terminating the plan as markets turned.

Meanwhile, Spire Global, operator of a satellite network providing climate and weather data, actually did hit the launch button for its public offering. Shares of the San Francisco-based company, which went public via SPAC last year, are off more than 90% from their peak. Prior to going public, Spire raised over $165 million in venture funding.

In the private markets, other weather-focused startups operating from the sky have also pulled in funding. This includes GeoOptics, which provides satellite data to the National Oceanic and Atmospheric Administration’’s Commercial Weather Data Program. And Denver- based Urban Sky has raised seed funding to scale its remote sensing “stratospheric microballoons.”

Crunching weather data back on Earth

Back on Earth, startups are also scaling up a plethora of offerings aimed at making sense of and making decisions around ever-amassing stores of environmental data.

Climavision, of Louisville, Kentucky, raised $100 million last year for proprietary weather data and forecasting tools. Its offering combines space-generated data with a private network of high-resolution radars in an effort to fill in weather coverage gaps.

In Silicon Valley, Jupiter Intelligence has secured $88 million in venture funding to date to provide weather and climate risk analytics to industries including insurance, real estate and energy. It offers scores for a set of risks, including fire, flood and wind.

On the consumer end, Santa Monica-based Sensible Weather offers policies that reimburse people for travel or outdoor activities in the event of impending inclement weather. The 3-year-old company closed on $12 million in Series A funding in May.

The insurance industry looks like a particularly voracious consumer of upgraded climate and weather-related risk management technologies. That’s largely what following the money would lead one to expect.

Insured natural catastrophe losses have increased 360% within the past 30 years, according to a report from research firm Capgemini. A survey of insurers recently found that about 40% rated climate change as a top priority.

But while concerns may be more urgent today, they’re certainly not new.

“To give credit where it’s due, the insurance industry has always recognized the importance of weather-related risks to its business,” Honig observed. “Catastrophes like hurricanes, floods and wildfire make the headlines, but even a bad hailstorm or a few days of temperatures cold enough to freeze water pipes are big drivers of losses.”

Goodbye, summer

Having reached the tail end of  what has been a grueling hot summer for many, frozen water pipes almost sound like a delicious, icy treat. But, rest assured, within a few months it’ll be yet another seasonal hassle with which to contend.

If we can take one lesson from the influx of startup funding around weather, it may be this: None of us can realistically expect entrepreneurial ingenuity to prevent Mother Nature from doing her thing. On the bright side, however, weather startups do appear to be seeing progress in making things a bit more predictable.

Illustration: Dom Guzman

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