In 2014, undergrowth Co-founder and CEO Alex Kubicek was on a mission to deploy a network of ground-level weather stations to track the weather in real time and anticipate needs, for example, in terms of committing resources to an area after or during a storm.
At that time, Kubicek teamed up with Brian Dow to create the weather stations with the goal of adding another 10 to 15 minutes to a storm or tornado warning. However, they discovered that much of the data used to forecast the weather was from the 1980s.
“We needed a much better weather data set, and that’s when I connected with Brian Dow to build the weather station,” Kubicek told TechCrunch. “It is a solid-state measurement that measures wind, rain and hail 125,000 times per second, in addition to measuring temperature, pressure and humidity. “That gives us a really deep and detailed understanding of what is happening on the ground.”
Over the next eight years, Understory, based in Madison, Wisconsin, would deploy the weather stations, called Dot, around the world, collecting more and more data. It also raised about $40 million in funding, including a $1.9 million seed round led by True Ventures in 2014.
With all that data, the company was able to build global catastrophe models to help better understand the risk of individual properties. Those models were validated by its reinsurance partners, who told Understory it should sell this historical data set as a software-as-a-service or data services product, Kubicek said.
However, Kubicek and Dow had bigger plans. During that time, they met Neil Irwin, a senior executive at one of the world’s leading insurance brokerages, and decided to create their own insurance company.
Irwin took over as co-founder and international president to help them learn about the insurance industry and “catapult Understory into this really exciting next phase,” Kubicek said.
Understory began providing insurance offerings that are tailored to meet the growing threat of severe weather risk, often called parametric insurance. For example, it launched an insurance solution Dealers Open Lot, which offers risk management for U.S. auto dealers. Since then, it has provided protection for dealer inventories across the United States in nearly 1,000 locations.
By providing early notifications to auto dealers, Understory has been able to save customers hundreds of millions of dollars in damages. Irwin said one client in particular was able to reduce auto hail damage from $110 million to $50 million just by getting that early notice.
“In the audit world, we don’t just help people with climate-related risks, although that’s huge,” Irwin said. “We have been able to avoid 10 major incidents and about $3 million of actual losses that would have occurred.”
The understory has experienced 500% year-on-year growth over the past year. And now it is going in a new direction, launching a product focused on the renewable energy sector. It is doing so with a new $15 million Series A capital round co-led by True Ventures and Prelude Ventures.
Kubicek said its patented risk mitigation technology helps solar farms, for example, save 50% on hail repair costs by leveraging purchasing power at scale. Since some of his models can predict weather events with 45 minutes’ notice, solar farm operators could have time to store or move the panels, which deflects hail by changing the angle of impact.
This can turn a $10 million loss into a $5 million loss, or even a $2.5 million loss into a $500,000 loss, with the right approach, he said.
“The current solar industry is in crisis right now,” Kubicek said. “A lot of these contracts are being canceled because the only place they’re trying to build these big solar projects is in areas where the sky is literally trying to kill you. “With our technology, we can mitigate that risk.”