Who knew betting on the weather could make a billion dollars? It just did for The Climate Corporation, which underwrites weather insurance for farmers. Monsanto broke the news this morning that it was buying Climate for approximately $930 million. The idea is to sell more data and services to the farmers who already buy Monsanto's seed and chemicals. Climate (formerly known as Weatherbill) has raised $107 million from a plethora of backers since it began fund raising in 2007. Its biggest investors include Khosla Ventures, New Enterprise Associates, Google Ventures, Index Ventures and Founders Fund.
Climate's cofounders were early Google employees who saw a self-service approach to weather insurance, which had previously been sold in custom, over-the-counter negotiations. Clients go to its site and outline what range of temperatures and/or rainfall they want protection from, for a set period of time. In 100 milliseconds Weatherbill crunches forecasts and 30 years of National Weather Service and geological survey data for the user's location. After adjusting–minutely–for climate change, Weatherbill names a price and acts as the underwriter. Policy holders get their checks automatically if the weather doesn't go their way. Originally Climate pitched its insurance to any weather-dependent businesses (farmers, housepainters, golf ranges), but it soon realized its biggest market was in agriculture. "It had the most significant opportunity, the most significant product, and had the greatest impact," cofounder David Friedberg told Forbes in a 2011 post.
