How Weather Startups Are Holding Up In A Dryer Funding Climate

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With extreme weather on the rise, tools to predict and help take precautions against potentially damaging events are more in demand than ever. As a result, we’ve seen some brisk dealmaking over the past couple of years in providers of weather forecasting and analytics tools.

This week, private equity firm Francisco Partners became the latest to storm into the weather space, announcing its acquisition of The Weather Co. assets from IBM. Although the purchase price wasn’t disclosed, an earlier report pegged the price tag at more than $1 billion.

There’s a huge audience included. Per Francisco, the weather forecasting apps and websites included in the purchase serve an estimated 415 million people each month.

The deal comes amid a period of sharp growth for the weather forecasting industry. Revenue from weather apps alone is projected to grow at more than 11% annually from 2022 to 2027. Other verticals, including weather tracking technologies and analytics tools for insurers, are also seeing stepped-up interest and growth prospects.

Startups, too, have seen plenty of investment action. For a sense of where the money is going, we used Crunchbase data to curate a sample set of 27 weather-focused companies that raised funding in the past two-and-a-half years:

Deals still getting done

Companies on the list have collectively raised more than $1 billion to date. And while average round sizes have come down from the 2021 market peak, we’re still seeing a steady clip of deals getting done.

So far in 2023, the largest funding round went to Tomorrow.io, a 7-year-old, Boston-based startup building a weather satellite constellation equipped with radars and microwave sounders. The company raised $87 million in a June Series E, bringing total funding to over $270 million.

June was a busy month for weather-related seed fundings as well. This included a $6.5 million financing for Raincoat, a climate insurance upstart, a $6 million seed round for WindBorne Systems, which builds and operates a constellation of smart weather balloons, and a $4.6 million investment in Reask, a developer of tools for organizations to forecast exposure to catastrophic weather risks.

Small investments for a giant problem

Given the growing scope of damage and casualties from weather-related catastrophes, it’s easy to get the impression startups in the weather space are receiving comparatively small potato investment sums. In the U.S. alone, 122 separate billion-dollar disasters between 2016 and 2022 killed at least 5,000 people and cost over $1 trillion in damage, per the National Oceanic and Atmospheric Administration.

And of course, with climate change, extreme weather is only expected to get more extreme. If better forecasting and weather risk management tools could mitigate even a tiny fraction of related losses, they would comprise a multibillion-dollar market, not to mention an invaluable humanitarian contribution.