You don’t often hear the words “technology” and “insurance” in the same sentence. But at a press event today, a high-tech weather insurance startup called WeatherBill announced that it has received a big infusion of Series B cash from some serious Silicon Valley investors, including Google Ventures and Khosla Ventures, for its automated system of reimbursing farmers for adverse weather events affecting crops.
Founded five years ago by ex-Googlers David Friedberg and Siraj Khaliq, WeatherBill sells farmers insurance policies that are priced according to the weather risks in each customer’s region and that pay out automatically (with no need for a claim) if there’s an unusual amount of rainfall, drought, heat, cold, or snow. The San Francisco company’s Series B round, totaling $42 million, comes from existing investors Allen & Company, Atomico, Code Advisors, First Round Capital, Index Ventures, and NEA, as well new investors Google and Khosla.
The 30-employee startup has raised $60 million in all. Friedberg says WeatherBill’s focus is on using its probabilistic models to protect farmers against unexpected weather risk year-round, through a product launched last year called Total Weather Insurance. That helps smooth income, which allows corn and soybean farmers to invest more in sustainable agricultural practices, Friedberg says. “By getting a guarantee on what one might make per acre of farming, a farmer can feel more confident in their investments,” he says.
Bad weather accounts for 90 percent of crop losses around the world, according to the USDA. WeatherBill’s investors are betting that as climate change spawns more extreme weather events like the recent drought in Russia and the flooding in Australia, losses will increase, and that more farmers around the world will be attracted to the idea of hassle-free payouts tied to weather measurements. By supplementing government-subsidized crop insurance, WeatherBill can “fundamentally change the risk profile of the global agriculture industry,” Khosla Ventures founder Vinod Khosla said in a statement. “WeatherBill is one of those rare companies that has the leadership and vision to apply new technology to an ancient and daunting problem.”
WeatherBill charges $15 to $75 per acre for its insurance policies, according to Friedberg. In order to accurately price its policies and calculate payouts, WeatherBill has built a cloud-based system that continuously gathers weather data from multiple, independent sources and feeds them into large-scale weather simulations. The company says it plans to use part of the new funds to hire more software engineers, mathematicians, and climatological agronomists to refine this platform. It also plans to expand U.S. and international sales operations.
In a statement, Google Ventures managing partner Bill Maris said that investing in WeatherBill fits with the fund’s mission “to identify and fund big ideas.” Just last week Google Ventures revealed that it had co-led a $20 million investment in Transphorm, which is working on ways to vastly improve the efficiency of power converters used in data centers and other facilities. Maris said it wasn’t surprising to see a pair of ex-Googlers take a “big data” approach to overhauling an old industry like agricultural insurance.
“It’s something completely different” from the Transphorm investment, “but equally transformational,” Maris said at today’s press event. “This is actually not [an insurance company], it’s a technology company that happens to be doing insurance. We couldn’t think of a better DNA fit with Google Ventures.” Maris said Google will likely be able to help WeatherBill with large-scale computing design and engineering as well as product design and marketing.
WeatherBill has built several side businesses on its weather risk assessment platform, including a rain insurance product for travelers called RainCheck and insurance programs for organizers of outdoor events such as golf tournaments. The company can even insure ski resorts against lost revenue from low snowfall—though that certainly isn’t a problem in the western U.S. this year.
