WeatherFlow-Tempest

Growth Stage

Controlling the Cost of Weather

Analytics

Raised to Date: Raised: $2,498,285

Aggregate Commitments $

Platform

StartEngine

Start Date

11/12/2021

Close Date

04/29/2022

Min. Goal

$10,000

Max. Goal

$2,500,000

Min. Investment

$325

Security Type

Equity - Common

Funding Type

RegCF

Series

Pre-Seed

Price Per Share

$2.50

Pre-Money Valuation

$32,283,025

Rolling Commitments $

Status
Funded
Reporting Date

05/01/2022

Days Remaining
Funded
% of Min. Goal

24,983%

% of Max. Goal

100%

Likelihood of Max
Funded
Avg. Daily Raise

$14,871

Momentum
Funded
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Location

Scotts Valley, California

Industry

Business Services, Software, & Applications

Tech Sector

EnterpriseTech

Distribution Model

B2B/B2C

Margin

Medium

Capital Intensity

High

Business Type

Growth

WeatherFlow-Tempest, with a valuation of $32.3 million, is raising funds on StartEngine. The company uses an exclusive data and AI-driven model that helps in accurate weather prediction and controlling the impact of weather. The patented technology of WeatherFlow-Tempest, Nearcast Technology, provides the customers with point-specific weather information when and where they need it. WeatherFlow-Tempest doubled its revenues from $2.9 million in 2019 to $6.5 million in 2020. Buck Lyons and Phil Atkinson founded WeatherFlow-Tempest in December 2018. The current crowdfunding campaign has a minimum target of $10,000 and a maximum target of $1,070,000. The campaign proceeds will be used for growth and expansion.

Summary Profit and Loss Statement

Most Recent Year Prior Year

Revenue

$6,460,768

$2,901,812

COGS

$3,108,165

$1,171,800

Tax

$0

$0

 

 

Net Income

$-979,951

$-1,406,959

Summary Balance Sheet

Most Recent Year Prior Year

Cash

$157,664

$537,262

Accounts Receivable

$440,232

$680,634

Total Assets

$1,744,855

$1,647,229

Short-Term Debt

$1,845,412

$1,746,500

Long-Term Debt

$0

$100,000

Total Liabilities

$1,845,412

$1,846,500

Financials as of: 11/12/2021
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Ratings KingsCrowd Startup Rating Methodology Article

Analyst Report Analyst Report Methodology Article

Synopsis

Extreme weather has caused the United States billions of dollars in recent years, and it is expected to cost the economy $1 trillion over the next decade. Not only has the weather vastly impacted the country financially, it has also caused high fatalities. Yet the weather is still impossible to predict with 100% accuracy. Existing weather forecasts have only 80% to 90% accuracy for a seven-day forecast. On top of that, the current process of gathering weather data relies heavily on commercial aircraft flying all over the world. This dependency creates certain limitations to the weather forecast industry. For example, weather predictions became even more inaccurate during the pandemic, since most aircraft were grounded. 

WeatherFlow-Tempest’s main product, Nearcast Technology, provides time- and place-specific weather forecasting. The company guarantees accuracy on its past, present, and future weather information. The company has also developed Tempest Hardware sensors that can be easily installed and require very little maintenance. These weather sensors work with third party systems as well as WeatherFlow-Tempest’s software. In addition to its own sensors, the company also gathers data from sources such as satellites, government surface networks, and more. Using all this data, it then forecasts the weather by using artificial intelligence-based weather modeling. WeatherFlow-Tempest makes its forecasts available through specialized mobile apps and API integration. The company has also developed WeatherFlow Pro, a software-as-a-service offering that provides more real-time data and improved forecasts as well as suggestions on actionable decisions.

WeatherFlow-Tempest’s current StartEngine raise has been rated a Top Deal by the KingsCrowd investment team. 

Price

WeatherFlow-Tempest is raising via common equity with a valuation of $32 million. The company doubled its revenue in 2020 from $2.9 million to $6.4 million. For this round of funding, WeatherFlow-Tempest has a revenue-to-valuation of 5.3x. For a hardware and software company, this multiple is on par with the industry average. With the fair valuation and attractive revenue-to-valuation multiple, WeatherFlow-Tempest is raising at great terms for investors.

Market

The global weather forecasting system and solutions market was worth $2.51 billion in 2016. It was estimated to be growing at an annual rate of 7.1%. This market size is quite small, which could limit WeatherFlow-Tempest’s ability to provide significant returns to investors. Additionally, the industry has a dominating player in the National Oceanic and Atmospheric Administration, which already takes majority of the market share and leaves only a smaller piece for WeatherFlow-Tempest to grab. 

The weather forecasting market is only growing at a moderate rate. Some factors that contribute to this growth are the increasingly visible effects of climate change, growing sea and air transportation, and high dependency on rainfall for water supply. Weather forecasting systems are a huge help for both enterprises and individuals to improve their decision-making in either profit maximization or daily activities. However, the complexity of predicting extreme weather is a hindrance to the market growth. Although benefits of these forecasting systems are clear and there is an increasing demand for them, the market size is limited. This restricted market is the largest area of concern for WeatherFlow-Tempest as it may inhibit the company’s overall growth.

Team

WeatherFlow-Tempest was co-founded by Director Phil Atkinson, CEO Buck Lyons, and CTO David St. John. Atkinson went to Massachusetts Institute of Technology and Harvard University, although his degree and major are unspecified. Lyons got his bachelor’s degree in mathematics from Middlebury College and master’s degree in business administration from Stanford University. St. John got his bachelor’s degree in mechanical engineering from University of Florida and his master’s degree in engineering from University of California, Irvine. 

Prior to WeatherFlow-Tempest, the three of them worked together at WFn Holdings, Inc. Lyons and St. John co-founded WFn Holdings in 2000, and Atkinson joined as COO. WFn Holdings provides relevant and actionable weather data to commercial and government organizations. Lyons and St. John have left the company, but Atkinson splits his time between WFn and WeatherFlow-Tempest. This shared experience bodes well for WeatherFlow-Tempest as the founders have already demonstrated their ability to work together in building a weather-focused company.

Because of the founders’ history with WFn Holdings, Inc., WeatherFlow-Tempest now has a strategic partnership with WFn Holdings, Inc. for exchanging data and reselling services. With this partnership, WeatherFlow-Tempest can extensively widen its market reach and have more data that can contribute to its weather forecasting accuracy. 

WeatherFlow-Tempest currently has a total of 52 team members and one advisor. One team member worth noting is Chief Science Officer Marty Bell. He spearheaded the initial development of Nearcast Technologies. He has an extensive background in the weather forecasting industry. Bell founded and ran Metlogic for 11 years, a company that provides customized weather products based on its own weather modeling system. He then joined WFn Holdings, Inc. as its director of research and development prior to this venture. 

WeatherFlow-Tempest has a robust team. Each of the three founders has expertise in this particular field, lending confidence and credibility to the company. The founders’ past experience also provides a strong network that WeatherFlow-Tempest will benefit from as it grows.

Differentiators

The weather forecasting market is quite competitive, as it is a mature market. WeatherFlow-Tempest must compete against both major players like National Oceanic and Atmospheric Administration (NOAA) as well as multiple weather apps that provide similar services to the startup’s. Because WeatherFlow-Tempest uses NOAA’s data on its app, however, it does not consider NOAA to be a competitor. Like WeatherFlow-Tempest, competitors claim to be accurate, and the company doesn’t specify its accuracy rate on its raise page. However, it does offer a refund if its forecasts are not superior to competitors, which helps inspire confidence.

WeatherFlow-Tempest was able to patent its Nearcast Technology and its artificial intelligence-based computer modeling. The team has been gathering weather data ever since 1993, resulting in a massive amount of data. That long-term data collection creates an advantage as more data makes its weather modeling more accurate. The company’s patented technology combined with the massive amount of weather data make its service very defensible. Additionally, WeatherFlow-Tempest has a unique business model that allows for different revenue streams through hardware, software, and Application Programming Interfaces.

WeatherFlow-Tempest also has unique services that distinguish it from the competition. The company’s Tempest Hardware sensors are simple, easy to install, and require little maintenance. Furthermore, WeatherFlow Pro offers users suggestions on actionable decisions. These actionable decisions can also be automated through integration with numerous third-party applications, such as Siri, Alexa, and Google Assistant. For example, if paired with a smart home, the software can trigger outdoor lights based on the actual brightness of the sky. Altogether, WeatherFlow-Tempest needs to clarify its accuracy rate to provide a clearer picture of its advantage over competitors. However, it has a highly defensible product and unique features that help it stand out in a crowded and competitive market.

Performance

Although the team has been gathering data since 1993, WeatherFlow-Tempest only launched a year ago, and its traction has been outstanding. More than 20,000 customers have bought Tempest Hardware, and more than 3 million have used the application and software tools. The company currently has 60,000 paying customers and more than 500 business and government customers, including the American Navy. In addition, WeatherFlow-Tempest has 30,000 of its Tempest Systems across 125 countries, and it is amazing for the company to have a global footprint already. 

The company was able to increase its revenue from $2.9 million in 2019 to $6.4 million in 2020. That kind of revenue growth for such a young company is impressive. Moreover, WeatherFlow-Tempest has raised $2.2 million in prior funding. While the company has short-term debt of $1.8 million, it is due to outstanding convertible notes and inventory financing. The debt from convertible notes will soon convert to equity when the company raises a priced round in the future. As the company will not have to pay this debt back out of its revenue, it is not very concerning. Debt from inventory financing is also common for a company at this stage as it can be used to scale sales more quickly. 

Overall, WeatherFlow-Tempest has outstanding traction and impressive revenue. The company looks to be financially healthy and ready to continue growing.

Risks

WeatherFlow-Tempest is a non-risky investment opportunity. The company has already created and monetized its product. The founders have strong weather forecasting expertise and have worked together on a previous, similar company. The main concern for WeatherFlow-Tempest is that it is a high capital intensity business, so maintaining funding and revenue will be key. However, the company brought in more than $6 million in revenue last year, so this concern is mitigated by impressive performance.

Bearish Outlook

WeatherFlow-Tempest is operating in the weather forecasting system market, which is rather small. The market already has a dominant player, the National Oceanic and Atmospheric Administration, and there are many other competitors as well.  Since the market is niche, WeatherFlow-Tempest could have difficulty if it plans to expand to other markets. The company also does not specify its weather forecasting accuracy rate compared to existing players, although this is a crucial factor to differentiate its services. There are not many customer reviews online that can justify its claim of guaranteed accuracy, either. However, the company does somewhat alleviate these concerns by offering a full refund if consumers do not find its forecasts superior to others.

Bullish Outlook

WeatherFlow-Tempest bears little to no risk, as the company is relatively mature. The key team members have deep knowledge and experience in the weather forecasting industry, which substantiates the system’s predictions and actionable decision suggestions. The founders have also been gathering weather data since 1993, which is a huge point in this market as more data means better artificial intelligence-based weather forecasting. On top of WeatherFlow-Tempest’s multiple patents, this vast amount of data is the core of the service’s defensibility. 

While there are numerous competitors offering the same weather information as WeatherFlow-Tempest, the Tempest Hardware and WeatherFlow Pro are unique to the company. The WeatherFlow Pro software, which suggests actionable decisions based on forecasts, is useful in a variety of ways. For example, renewable energy companies can use the company’s data when collecting solar and wind energy and then decide how to allocate this energy more efficiently. The product’s ability to integrate with multiple third-party applications also smooths market adoption. 

WeatherFlow-Tempest has been performing tremendously well despite only launching a year ago. It was able to grow its revenue by 120% and has a global footprint across 125 countries. The company has also priced itself at fair valuation in this round. Furthermore, WeatherFlow-Tempest plans to expand to real estate, agriculture, and insurance markets. These verticals could provide the company with many revenue-generating options as it grows.

Executive Summary

WeatherFlow-Tempest’s main product, Nearcast Technology, provides weather forecasts specific to time and location and suggests actionable decisions based on those forecasts. It has three main “layers,” which are Tempest Hardware, its specialized weather apps, and WeatherFlow Pro. The weather forecasting market is niche and quite small with a dominating player. There are also numerous players in the market that offer similar services to WeatherFlow-Tempest. The company could struggle to gain market dominance as a result.

However, WeatherFlow-Tempest has developed features that distinguish it from its competition. Its actionable decision suggestions and easy-to-use sensors are both distinct offerings. Additionally, WeatherFlow-Tempest’s sensors are already being used across 125 countries, giving the company a global footprint. The company’s product is also quite defensible, as the team has been gathering weather data since 1993. This vast amount of data supports the accuracy of the company’s AI-based weather modeling. WeatherFlow-Tempest has a couple of patents as well, providing further defensibility. The company’s three co-founders have deep knowledge and experience in the industry and bring a deep network for the company to gain employees, resources, and funding from. WeatherFlow-Tempest has been performing tremendously well despite only launching a year ago. It was able to grow its revenue by 120% from 2019 to 2020. The company is also priced at fair valuation with an attractive revenue-to-valuation multiple. All in all, WeatherFlow-Tempest is rated a Top Deal. 

For questions regarding the KingsCrowd analyst report or ratings for this company, please reach out to support@kingscrowd.com.

Analysis written by Inez Sanjaya, November 24, 2021.

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Platform: StartEngine
Security Type: Equity - Common
Valuation: $32,283,025

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