Why we invested in Cloud to Street
Flooding is one of the few problems in water a significant proportion of the population has experienced and if you have, you know how much it sucks. Flooding is a huge issue in rural and urban areas. In 2021, floods accounted for 31% of global economic losses from natural catastrophes. 1.8 billion people now face significant flood risk and the vast majority are communities of color and of lower socioeconomic status, with 170 million of the people impacted by floods living on less than $5.50 a day.
Floods disproportionately affect those least able to deal with the problem. Affected populations of Mozambique, New Orleans, the Pacific Islands, Houston, farmers in Iowa and Colombia - the breadth of the risk is striking. And flood insurance is a major problem. Both underwriting and claims management are expensive and difficult as they rely both on access to deep hydrological expertise (and data) as well as on-the-ground observation of damage. But what if you could execute both sides of the insurance equation from space?
Cloud to Street is answering the question of how we make the rapid escalation in volume and quality of earth observation data useful and profitable. Their high-accuracy assessment platform for flood mapping and other hydrological events provides a scalable, cost-effective service to assess at high accuracy the incidence of floods on the ground in near real-time. This allows a range of stakeholders, from governments to INGOs, to respond quickly and accurately to floods on the ground. They recently expanded into parametric insurance and are literally clearing the way forward in flood risk management. Bessie, Beth and the entire Cloud to Street team, we’re delighted to reflect on BIV’s investment last year. Here’s why we did it.
This is a BIG idea, in a market ripe for innovation
If Cloud to Street just tracked floods in real-time, they would save millions of lives and help communities prepare for and respond to floods more efficiently. The sophistication of their hydrological models, and the lead they have in their flood mapping library allows them to predict floods on the ground in real-time. That means communities can act swiftly and in the appropriate ways to avert disaster.
Floods leave behind a devastating trail of destroyed property and lost livelihoods, often afflicting those who are least prepared to deal with the economic loss. The US alone experiences a $40bn annual loss due to flooding, 70% of which are not covered by insurance. That’s in part because insurance companies don’t have the right data to underwrite existing real assets and they also don’t have the information to effectively bring additional assets into their insurance portfolios with a reasonable degree of confidence. All of this is highly dynamic as a result of climate change. Cloud to Street recently started offering parametric insurance to farmers in Colombia. This allows the insurance industry to understand with a high degree of accuracy whether or not provisions for flooding have been triggered, helping to automate (lower the cost) of claims processing as well as assist in the improvement of claims underwriting as climate change begins to shift weather patterns. Cloud to Street represents nothing less than the advent of parametric insurance - a step forward long-mooted but not seen in a major deal until now.
Massive impact, and the team to deliver
In 2020 Cloud to Street was selected as the UN’s flood monitoring partner for the next four years. And they’ve since become the trusted flooding monitoring partner for Google, NASA, and the World Bank Group. With the shift toward insurance, the number of lives they touch and the ways in which they can help communities rebound from catastrophe is tremendous. In parallel to their initial partnerships with Willis Towers Watson, they have assembled an outstanding team of climate, data, and insurance experts to lead them into the parametric insurance market and beyond.
A Founding Team to build the right company
Bessie and Beth founded Cloud to Street while at Yale’s prestigious School of Environmental Sciences and Forestry and they are the ideal co-founder team. Bessie (CEO) was previously a field organizer and strategist, so brings a practicality to the strategy they are pursuing. Her relentless chipping away at the barriers in as monolithic and insular a market as insurance has been impressive. Beth (Chief Scientist), a PhD pursuing her postdoc at Columbia’s Climate School, is a world-class hydrologist who has led her team in developing highly sophisticated models that only get better with time and data, creating a sustainable moat around their offering. Nature doesn't just hand out cover stories - getting published at all is a very big deal indeed. Bessie and Beth are complementary, very smart indeed, and have managed the arc of the company towards their current position on the edge of something potentially transformative for a $35bn market that will grow significantly by virtues of Cloud to Street’s existence as they get traction (the Uber effect).
Preempting flood disasters can save lives and adding on parametric insurance will help reduce the burden of climate change on those most vulnerable. This is a vast and important market, and we’re excited to see this exceptional team lead the way. Bessie, Beth and the entire team at Cloud to Street thanks for letting us join along.