Storm Exchange Inc., a developer of software that helps clients hedge against weather risk, said Tuesday it has raised an additional $7.2 million from a group of venture backers.
The three-year-old startup said the expansion round came from existing investors RRE Ventures and Venrock Associates and other, unnamed firms. It builds on a $3.6 million Series A from RRE and Venrock and angel investors David S. Rose and Jefferies & Co. vice president Robert Lessin.
New York-based Storm Exchange's financial risk-analysis software tracks weather patterns and generates data relevant to a particular industry. It determines which information is relevant for a business, enters a client's financials and then extrapolates the type of weather they should hedge against. Through a partnership with Galileo Weather Risk Management Ltd., a unit of White Mountains Insurance Group Ltd., Storm Exchange can even implement the investment contracts needed for the hedge.
Given the concerns about global warming and the increased importance of growing crops for biofuels, weather patterns have become a concern of chief financial officers as well as traders. In an interview last fall, company founder, president and CEO David Riker told Tech Confidential that in 10 years, weather will become an $80 billion a year market. Several investment banks, such as ABN Amro Bank NV and Credit Suisse Group, have weather trading desks. Other weather hedging startups include WeatherBill Inc., which has raised $12.5 million in venture funding.
Storm Exchange is Riker's third startup. In the mid-1990s, he founded Riker Networks, a system for networked communications between bankers and institutional investors. The company failed after it couldn't win approval from regulators. In 2001, the entrepreneur sold eCoverage, an online auto insurance company, to General Motors Corp. at a loss to investors. - Olaf de Senerpont Domis
See March 4 press release from Storm Exchange
See November 2007 story from Tech Confidential
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