Weatherbill
From Wikipedia, the free encyclopedia
| WeatherBill, Inc. | |
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| Type | Private start-up |
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| Founded | |
| Headquarters | San Francisco, California, USA |
| Key people | David Friedberg, Founder |
| Industry | Financial services |
| Slogan | Weather is unpredictable. Your bottom line doesn't have to be. |
| Website | www.weatherbill.com |
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.
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[edit] Investors
- 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 parkparadigm.com
- Joshua Schachter
- Howard Morgan, entrepreneur and venture capitalist
[edit] 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.
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. WeatherBid's pricing is based on weather statistics and computer modeling of future weather forecasts and trends.
According to the company's website, contracts are legal and regulated by the Commodity Futures Trading Commission. Due to limitations imposed by the | Commodity Exchange Act], contracts are only sold to United States buyers who meet certain eligibility requirements.
[edit] Website Features
Flash-based 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.
[edit] Similar Products
WeatherBill contracts share some characteristics of derivatives, insurance, and gambling. 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. 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. 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.
[edit] External links
- Company website
- "WeatherBill Launches, Announces All Star Investors", TechCrunch, January 15, 2007
