US online grocer Farmstead has raised $7.9 million in a Series A funding round, in an effort to accelerate its national expansion.
The latest round was led by Aidenlair Capital and brings its total funding to date to $14.5 million. Other participators include Y Combinator, Duro, Maple VC, Heron Rock and Red Dog Capital.
According to Farmstead, its business has grown “swiftly” in 2020 amid the pandemic. Following its raise, Farmstead is focused on securing more partnerships with grocery chains, increasing its delivery capacity and expanding the national brand.
Farmstead is known for using AI technology and a dark store model – delivery-centric warehouses that serve a 50-mile radius – to maximise efficiency and reduce costs.
As a result, Farmstead claims it offers consumers prices comparable to or lower than most supermarkets, but with free delivery to doorstep. Farmstead also says its dark grocery store strategy greatly eases entry into new geographies and reduces food waste.
In October, Farmstead announced that it will be opening its first expansion market in Charlotte, North Carolina, followed by its second in November in the same state. The news also follows the company’s launch of Grocery OS in September, in order to help grocers take delivery in-house.
“In order to fix grocery delivery and make it profitable, Farmstead took the bold approach of breaking the traditional model and starting completely from scratch, while opening up Grocery OS to other retailers,” said Tim Reynders of Aidenlair Capital.
Pradeep Elankumaran, co-founder and CEO of Farmstead, added: “The Farmstead team worked hard in 2020 to perfect the dark store model and the underlying proprietary technology that makes Farmstead so incredibly efficient.
“This industry has been stagnant for long enough – customers demand change and we are building the foundation for sustained e-commerce growth in grocery while exceeding their expectations.”
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