Storm Exchange

About Storm Exchange

Storm Exchange, founded in April 2006 by serial entrepreneur David Riker, operated as a weather risk management company based in New York City. Riker, who previously founded the online auto insurance company eCoverage, identified a significant market opportunity in helping businesses mitigate the financial impact of weather volatility. The company aimed to move beyond the "weather excuse" often cited by corporations for poor performance by providing sophisticated financial solutions.

The firm's business model centered on providing a platform for managing weather risk. It offered clients weather-related data and benchmarks, working with them to correlate their revenues to specific weather conditions and thus quantify their exposure. This enabled businesses in sectors like agriculture, energy, and tourism to hedge against adverse weather events. The target clients also included investors, insurers, and other financial industry participants who could use the information to anticipate weather's impact on investments. Storm Exchange's primary products were financial instruments known as weather derivatives, such as options and futures tied to metrics like temperature (Heating Degree Days and Cooling Degree Days), rainfall, and snowfall. These instruments allowed companies to smooth earnings and protect their bottom line from unexpected weather patterns.

Storm Exchange secured significant venture capital funding, raising a total of $10.8 million over two rounds. The initial Series A round in December 2006 brought in $3.6 million, followed by a $7.2 million Series B round in March 2008. Key investors included prominent venture capital firms RRE Ventures and Venrock, with whom Riker had long-standing relationships from his previous ventures. Despite its early promise and the growing relevance of climate change and weather volatility, Storm Exchange is now considered a deadpooled company.