VentureBeat

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WeatherBill, a company that lets you make money by betting on the weather, has raised $12.5 million.

The San Francisco-based company sells contracts that essentially let you put money down against bad weather hurting your business, so you can still get paid even if your business itself suffers.

You can choose your contract to be for hot, cold, rainy, snowy or dry days or seasons, and customize every specific aspect of your scenario, such as the temperature, precipitation or snow level. Choose a location with all of your weather specifications and how much you hope to earn from the contract, and the site will calculate its cost.

For example, VentureBeat could purchase a contract to bet that cold winter weather will hit the Bay Area all of next week — a way to make ourselves feel a bit warmer if this turns out to be the case (screenshot below). We’d get paid $100 from WeatherBill for every day that the minimum temperature dips below 65 F. The example below shows the contract would cost us $660. Question is: How likely is it that every day next week will be that cold? There’s a chance we won’t make our money back — and we’re not experts enough at predicting the weather to know.

But let’s say you’re a travel agency and you want to guarantee your customers that they will receive a full refund if their flights get cancelled due to heavy snows on New Year’s Day, 2008. Simply take out a contract with WeatherBill and it will pay you if there’s enough inches of snow on the ground to cancel flights — that’s what a Canadian travel agency called itravel2000.com has done, a contract that company chose to be worth up to $100 million.

WeatherBill bases its prices on accumulated weather statistics as well as computer-generated models of weather forecasts and longer-term trends.

Hundreds of businesses have bought contracts, typically worth less than a couple million dollars; the company earns between one and 20 percent revenue from its contracts, chief executive David Friedberg tells us.

Weatherbill is growing quickly he says, and is cash-flow positive — most likely because it makes money no matter what. Nephila Capital, a re-insurance fund that normally sells capital bonds, weather derivatives and financial instruments to large clients such as insurance companies, backs 100 percent of WeatherBill’s risk, paying the company in the event customers cash out on large contracts.

Because WeatherBill’s contracts are considered “over the counter financial instruments,” Friedberg says, they are regulated by the US Commodity Futures Trading Commission — meaning that businesses and individuals must have a net worth of over one million in order to purchase them.

Current clients include ski resorts, farms, restaurants, outdoor sports companies, and others.

New Enterprise Associates and Index Ventures led the round, with Allen & Company, Atomico Investments and angel investors participating. Current investors include First Round Capital and angel investors.

Here’s the latest wrap-up of Silicon Valley tech news:

Cisco sues Apple over iPhone name — Who cares? If Apple loses, it will come up with a different name. Like, ApplePhone, or iPodPhone. Details of suit.

Yahoo signs deal with Akimbo to deliver video to televisions — Just the latest move in a huge number of deals pushing video to your TV. More details here.

Avvenu shares music via link in email — Avvenu, a Palo Alto start-up has been around for a while, but has introduced a new service for sharing music. By downloading a free music player, users can select tracks they wish to share (250 for free) and send links to friends via email. Recipients click on the link to listen for up to five days. Users sharing their music must have iTunes software downloaded, though recipients don’t. Works on Windows mobile software, too.

The latest on Jeff Bezos’ space project – Here’s the scoop from Amazon.com’s Bezos on Blue Origin, which reveals a cone-shaped vehicle to be used “to lower the cost of spaceflight so that many people can afford to go and so that we humans can better continue exploring the solar system.” Tests have already been made, though the program has some ways to go.

MyBlogLog sold for reported $10M, after no venture capital, and then spammed — The service, which lets bloggers and others see who is reading their blogs, and where those readers tend to go afterward, has sold to Yahoo for a reported $10 million. MyBlogLog became popular last year, after its little widget started showing up on blogs with the pictures of their readers. Some 45,000 bloggers had signed up for it. Om talked with chief exec Scott Rafer. Lately, though, some have showed it is relatively easy to spam.

Update on Techdirt’s analyst service — As reported (see here), Techdirt raised $600,000 to build out its Insight Community product, which hooks up expert bloggers with companies that seek their advice. Mike Masnick (left), of Techdirt, who has built the company without outside investments over the past decade, tells VentureBeat he finally bit the bullet, realizing it made sense to raise money to help build out the project — given all of the interest he’d received in it. It is still in testing mode, but he’s now building more interactive features, letting people in the network communicate with each other, rather than limit it to one-to-one relationship originally envisioned. Entrepreneur Mark Fletcher, one of the investors, joins the board. Also, investors were all outsiders. Insiders didn’t participate, as suggested earlier by the PEhub report, Masnick said.

Slideshow company Slide raised $20 million — We’d reported Slide’s venture round last year. Reports suggest Slide raised $20 million, giving it a valuation afterward of $60 to $80 million. This gives it some runway, even as competitor Filmloop lays off most of its workers. Here is our earlier story.

Weatherbill, an online site to sell weather insurance policies to individuals and businesses — Sounds boring, but it has all the Map mashups and other Web 2.0 candy to make it worth a look (via Techcrunch)
It has raised a first round of round of financing from NEA, Index Ventures and a number of angel investors.

Second Life has opened its application to developers — Many people find the virtual world Second Life difficult to get the hang of, which has no doubt limited its growth. Now it has opened its software for developers to provide alternatives. It isn’t clear whether this will spark a vibrant developer community or not.

Podzinger searches words in YouTube videos — Podzinger gives you a way search for words that are mentioned in YouTube videos. Podzinger has a tab letting you do this on its front page, and it tells you how many minutes and seconds into the video the reference is (although we couldn’t figure out how to zip automatically to the reference, like Pluggd does). More details here, at Splashcast blog. Blinkx is another company that searches audio and video files.

PayPerPost drops its purchase of Perfomancing assets — Details here.

Aaron Swartz, of Reddit, not done dreaming — Good piece in the Chronicle mentioning the impressive rise of Swartz, who built his first web site at 13, got bored, and then, circuitously, ended up building Reddit, which was bought by Wired Digital. Now 20, he says he’s headed back to academia soon. Re hanging out: “I’m so shy I don’t even hang out with the people I know now.”

Hype at Asiatech? — Days ago, we reported on the purchase of software developer Mediabolic by Macrovision. Sources told us the return was marginal, giving later investors slightly more than the money they invested. But it was no where near a two-fold return claimed by AsiaTech investor Katherine Jen in an interview with VentureWire recently, they said. Jen did not respond to a request by VentureBeat for comment about her “2x return” claim.

See Jobs’ demo of iPhone — It is striking, and worth it. See here, and click on “touch navigation” for starters.