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RRE, Venrock back weather exchange

A group of private equity firms, including initial backers RRE and Venrock, have invested $7.2 million in the Storm Exchange.

US venture capital firms RRE Ventures and Venrock are among a group of investors providing $7.2 million (€4.7 million) in expansion capital to Storm Exchange, an electronic weather exchange allowing firms to determine weather-related risks and seek financial solutions to mitigate them.

RRE and Venrock are the original backers of Storm, which was launched in April 2007. Since its launch, Storm has developed more than 500 proprietary benchmark weather indices as well as analytics and hedging solutions.

 

“We’re bringing financial innovation to bear through the capital markets in order to offer companies effective hedging solutions,” said Storm chief executive David Riker in a statement. “Our clients are seeking to reduce financial uncertainty and offset the negative impact that volatile weather has on customer demand, earnings, costs and cash flows.”

To date, Storm has been most active in the agriculture, energy and manufacturing markets and has launched initiatives including the California Orange Frost Hedging Program which services the California citrus market.

The company says it is building the market for its products across other weather sensitive industries including aviation, travel, construction and outdoor entertainment.

Storm is not the only weather-related risk company to receive venture backing. In October 2007, New Enterprise Associates and Index Ventures, along with Allen & Company, Atomico Investments and angel investor Sean Park, took part in a $12.5 million Series-A fundraising round for WeatherBill. WeatherBill is an online service that allows businesses to mitigate the impact of bad weather.

Venrock, originally the venture capital arm of the Rockefeller family, is currently investing Venrock V, which closed on $600 million in April 2007.

RRE Ventures manages $850 million in assets for investments in the software, communications and financial services industries.