In 2014, Understory co-founder and CEO Alex Kubicek embarked on a mission to deploy a network of ground-level weather stations to monitor weather in real time and anticipate needs, such as allocating resources to areas affected by storms.
At that time, Kubicek collaborated with Brian Dow to create weather stations with the aim of extending thunderstorm or tornado warnings by an additional 10 to 15 minutes. However, they discovered that much of the data used in weather forecasting was outdated, primarily from the 1980s.
“We needed a significantly improved weather data set, which led me to connect with Brian Dow to build the weather station,” Kubicek explained. “Our system features solid-state measurement, recording wind, rain, and hail at 125,000 times per second, along with temperature, pressure, and humidity, providing a comprehensive understanding of ground-level conditions.”
Over the next eight years, Understory, based in Madison, Wisconsin, deployed these weather stations, named Dot, globally, continuously gathering data. The company also secured around $40 million in funding, including an initial $1.9 million round led by True Ventures in 2014.
With this extensive data, Understory developed global catastrophe models to better assess risk to individual properties. These models were validated by its reinsurance partners, who advised Understory to market this historical data as a Software-as-a-Service or data services product, according to Kubicek.
However, Kubicek and Dow envisioned more. They met Neil Irwin, a senior executive at a leading global insurance broker, and decided to establish their own insurance company.
Irwin joined as co-founder and international president to provide insights into the insurance industry and propel Understory into an exciting new phase, noted Kubicek.
Understory began offering insurance services that adapt to the increasing threat of severe weather, often referred to as parametric insurance. For instance, it introduced a Dealers Open Lot insurance solution, offering risk management to U.S. auto dealers. It now protects inventories at nearly 1,000 dealer locations across the country.
By providing early notifications to auto dealerships, Understory has saved customers hundreds of millions of dollars in damages. Irwin mentioned that one client was able to reduce hail damage from $110 million to $50 million due to the early alerts.
“We’re not only helping with climate-related risks, which is significant,” Irwin stated. “We’ve prevented 10 major incidents and around $3 million in actual losses that would have otherwise occurred.”
Experiencing 500% year-over-year growth in the past year, Understory is now shifting focus to the renewable energy sector. It launched a new product along with a $15 million Series A funding round co-led by True Ventures and Prelude Ventures.
Kubicek mentioned that their proprietary risk mitigation technology aids solar farms in saving up to 50% on hail repair costs by leveraging purchasing power at scale. Some of their models can predict weather events with a 45-minute notice, giving solar farm operators time to adjust panel angles to deflect hail.
This approach can turn a potential $10 million loss into a $5 million loss, or even a $2.5 million loss into $500,000, he said.
“The solar industry is currently facing a crisis,” Kubicek remarked. “Many contracts are being canceled as projects are often located in areas with severe weather risks. Our technology helps mitigate these risks.”
