Climate change: Silicon Valley invests in extreme weather insurance
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Silicon Valley venture capitalist Vinod Khosla and Google Ventures have invested $42 million in a start-up run by former Google employees, which helps insure farmers against losses from increasingly volatile global weather.
Khosla Ventures and Google Ventures join Allen & Co, NEA and other investors in WeatherBill, whose team of software engineers and climatologists collates weather data from various sources, then sells insurance based on statistical analysis.
WeatherBill -- founded by ex-Google employees David Friedberg and Siraj Khaliq -- argues that the $3 trillion in annual global agriculture production is increasingly at risk from wild and unpredictable weather fluctuations. The year 2010, during which extreme weather caused devastating floods in Pakistan, China and Australia and a heatwave in Russia, was the warmest on record alongside 1998 and 2005, the United Nations says.
A U.N. panel of climate change experts says weather is likely to become more extreme in the 21st century, affecting everything from food to water supplies, because of a build-up of heat-trapping gases from human use of fossil fuels. ‘More than 90% of crop losses are due to unexpected weather, and climate change is increasing the frequency of extreme weather events,’ CEO Friedberg said in a statement.
The firm in 2010 launched its core product, called Total Weather Insurance, which pays clients automatically based on weather conditions, without a claims process. The new funding will support WeatherBill’s product development and sales expansion plans in the United States and overseas.
The bet by Khosla and Google comes as venture funding in ‘green’ companies slows. Investment in cleantech globally slid 30% in the third quarter from the second quarter to about $1.53 billion with a notable pull-back in solar investment, the Cleantech Group said.
But investors say, longer-term, cleantech investment remains an attractive prospect. According to the Venture Capital Journal, a Thomson Reuters publication, almost three-quarters of U.S. venture capitalists see increasing cleantech spending as a top priority for them over the next five years.
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