Weatherbill

Infobox_Company
company_name = WeatherBill, Inc.
company_
vector_
company_type = Private start-up
genre =
foundation = 2006
founders = David Friedberg and Siraj Khaliq
location_city = San Francisco, California and Georgetown, MA
location_country = USA
location =
origins =
key_people = David Friedberg, Founder; Siraj Khaliq, Founder
area_served =
industry = Financial services
products =
revenue =
operating_income =
net_income =
num_employees =
parent =
divisions =
subsid =
owner =
company_slogan = Weather is unpredictable. Your bottom line doesn't have to be.
homepage = [http://www.weatherbill.com www.weatherbill.com]
dissolved =
footnotes =

WeatherBill is an electronic commerce website launched in January 2007 that allows companies to buy contracts based on future weather events as a hedge against weather-based business risks.

Investors and underwriters

Investors in the company's $4.3 million seed funding round include [http://www.indexventures.com Index Ventures] , a European Venture Capital firm, New Enterprise Associates, Atomico Investments, a private equity fund managed by Niklas Zennstrom, Sean Park, who runs blog site [http://www.parkparadigm.com/ parkparadigm.com] , Joshua Schachter, and Howard Morgan, entrepreneur and venture capitalist. On October 17, 2007 the company closed a $12.5 million Series A round, with venture funding from New Enterprise Associates, Index Ventures, Allen & Company, Atomico Investments, and Sean Park.cite news|url=http://www.redherring.com/Home/22992|publisher=Red Herring|accessdate=2007-10-18|title=$12.5M Rains on Weather Risk Startup|date=October 17, 2007|author=Ken Schachter]

Nephila Capital, a Bermuda-based investment manager, reinsurance company, and hedge fund, underwrites the risk of weather-based payouts.

Products

WeatherBill's products are financial instruments based on future weather events, marketed via the company's website to businesses that are affected by weather events. These are promises by WeatherBill to pay the buyer a specific amount of money if a certain weather event happens at a particular location within a specified timeframe. They are not insurance, in that there is no claims process or requirement to prove damages.

As an example, TechCrunch mentions golf course owners may buy a contract by which they will receive $1,000 per day of rain, thereby shielding the course against losses due to bad weather. The company also markets contracts to commodity traders, who may use them to hedge investments they have made in future crops or other goods whose value is affected by the weather. WeatherBill's pricing is based on weather statistics and computer modeling of future weather forecasts and trends.cite web|publisher=TechCrunch|accessdate=2007-01-16|url=http://www.techcrunch.com/2007/01/15/weatherbill-launches-announces-all-star-investors |title=WeatherBill Launches, Announces All Star Investors|author=Michael Arrington|date=January 15, 2007] One of the company's early clients is an Arizona ski resort that uses Weatherbill to hedge against losses from a refund it offers season ticket holders should there be inadequate snowfall during the season.

According to the company's website, United States contracts are legal and regulated by the Commodity Futures Trading Commission. Due to limitations imposed by the [http://www.mfainfo.org/washington/legislative/comex.pdf Commodity Exchange Act] , contracts in the United States are only sold to buyers who meet certain eligibility requirements. As of October 17, 2007 the company also offered contracts in the United Kingdom, Germany, Netherlands, Spain, and Norway.

Website Features

Flash-based [http://www.weatherbill.com weatherbill.com] serves as both the company's corporate website and also a front-end interface by which customers may obtain quotes for and purchase contracts. WeatherBill also offers various free software tools from its website that companies may use to assess and manage their weather risks.

imilar Products

WeatherBill contracts share some characteristics of derivatives, insurance, and gamblingfix|link=Wikipedia:Contents|text=citation needed. Derivatives are financial instruments tied to the value of a particular asset such as stock shares, bonds, foreign currency, or an agricultural crop, whereas WeatherBill contracts are tied not to an asset but to weather occurrences.

There exists a key difference between Weatherbill weather protection and insurance. Companies can buy insurance polices for protection against weather-based risks such as floods, storms, or other extreme events, but the policies pay out only in the event of an actual economic loss due to disaster, and reimburse only the actual amount of loss via a claims procedure. By contrast, WeatherBill contracts pay a fixed amount based on weather events without regard to the extent if any of actual loss. There is no claims process.

Finally, gambling is a recreational activity by which individuals may wager that certain events will happen for purposes of personal gain, against other individuals or companies willing to bet that those events will not happen, with the price (the odds) set by arbitrage by the house between the two. WeatherBill, by contrast, is the underwriter of its own contracts, and serves as a market mechanism to shield businesses against losses.

References

Further reading

* [http://www.artemis.bm/blog/2008/06/02/weatherbill-arrange-holiday-refund-weather-cover-for-pricelinecom/ "Weatherbill arrange holiday refund weather cover for Priceline.com"] , "Artemis.bm", June 2, 2008
* [http://www.aviation.com/business/080425-predicting-weather-delays.html "Weather-Related Flight Delays Can Be Predicted"] , "Aviation.com", April 25, 2008
* [http://www.reuters.com/article/pressRelease/idUS92833+07-Feb-2008+PRN20080207 "WeatherBill Expands Team with Addition of Leading Weather Insurance Veteran"] , "Reuters", February 7, 2008
* [http://www.reuters.com/article/pressRelease/idUS151610+27-Dec-2007+PRN20071227 "WeatherBill Publishes Study Identifying the Impact of Weather on Film Box Office Revenue"] , "Reuters", Dec 27, 2007
* [http://www.industryweek.com/ReadArticle.aspx?ArticleID=14966 "Study Examines Climate Change in Major US cities"] , "IndustryWeek", September 17, 2007
* [http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/06/06/BUG6AQ3E0Q79.DTL&hw=Rain%2BShine%2Bthey%2Baid%2Bbusiness%2Bclimate&sn=055&sc=151%20 "Startup offers financial hedge against weather"] , "San Francisco Chronicle", June 6, 2007
* [http://www.theenergydaily.com/pr/pr.php?iid=15677 "Weatherbill Expands to Small Towns"] , "The Energy Daily", May 24, 2007
* [http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/05-17-2007/0004590458&EDATE= "Study Examines Rain Patterns in US"] , "PRNewsWire", May 17, 2007
* [http://www.worldgolf.com/newswire/browse/8795-Study-examines-impact-of-climate-change-on-U-S--golf-industry "Study Examines Impact of Climate Change on US Golf Industry"] , "World Golf", March 30, 2007

External links

* [http://www.weatherbill.com/ Company website]