This morning Monsanto announced its acquisition of The Climate Corporation. Index Ventures led Climate’s seed round and co-led or participated in every round the company has raised since. We are enormously proud of what David Friedberg and his team have achieved.
Our first encounter with David was in London in 2005. He met with us to get a sense of whether he could convince Google-- where he worked as a Corp Dev executive-- to buy Skype at a reasonable price. We were so impressed with him that in the meeting we tried to convince him to join one of our portfolio companies. We thought he was perfect for the role but while he loved the company, he didn’t want to move to Toronto. Although he declined the offer, we stayed in touch and when he and Siraj Khaliq approached us in 2006 with a plan to offer parametric weather insurance through a self-service website we decided to give them a $300k convertible note and Weatherbill (since renamed The Climate Corporation) was born.
While certain forms of weather coverage were available via custom over-the-counter deals via the weather desks of major investment banks, these did not offer the flexibility or the transparency of a self-serve engine, and they were certainly neither available nor affordable for small businesses. Recognizing that a vast number of businesses are negatively affected by adverse weather Climate’s mission was to change this and allow any business to buy a policy that would automatically pay out a certain amount, if specified weather conditions occurred in a specified location over a particular period of time—without having to go through a claims adjustment process. And this is precisely what they built.
In the early days, Climate explored applications of its coverage to the travel industry (moneyback if it rains too much on your beach holiday, for example), events (the US Open Tennis Championships), construction, film production and others, but quickly realized that the single largest and most readily addressable opportunity lay in the global $3 trillion agriculture industry. So David and his core team - comprised of Greg Smirin (COO), Kevin Vosen (Chief Legal Officer) and Jeff Mize (VP Sales) focused the company squarely on bringing the benefits of parametric weather insurance to farmers.
In addition to building core strength in Big Data and climatology, Climate Corp developed expertise in agronomy in order to understand how climate variability affects different crops. To price its insurance products, Climate Corp’s platform ingests weather measurements from 2.5 million locations and forecasts from major climate models, and processes this data along with 150 billion soil observations togenerate 10 trillion weather simulation data points, requiring it to manage 50 terabytes of live data at any given time. Needless to say, this company has built daunting barriers to entry.
For several growing seasons now, Climate Corp has been leveraging its unique platform to offer an array of innovative services to farmers which help them improve the efficiency of their operations and be more profitable by better understanding their exposure to weather risk and making better decisions.
We are thrilled that the transaction announced today will combine Climate’s unique capabilities with Monsanto’s preeminent position as a supplier of sophisticated agricultural products and enable farmers around the world to benefit from the protection of Climate Corp’s groundbreaking products. We are extremely fortunate to have had the privilege of working with David and his team as they built such a unique and valuable company and wish them continued success.
By Neil Rimer, co-founder of Index Ventures