Digital micro-grocer Farmstead has raised an additional $2.2 million venture round to help accelerate its nationwide expansion. The funding comes from ARTIS Labs, Resolute Ventures, Y Combinator, Red Dog Capital and other investors, bringing the company’s total raised funds to $7.5 million.
Founded in 2016, Farmstead sources and delivers fresh, local food from farm to fridge within 60 minutes, using its AI-powered predictive analytics models to accurately predict demand and supply accordingly to help minimize food waste. The company currently serves the Bay Area, where its customer base has been growing 20%-30% month over month with strong repeat business, according to a statement.
“To replace a trip to the grocery store, so many things have to go right, from ordering the right inventory to last-mile delivery,” said Mike Hirshland, general partner with Resolute Ventures. “Farmstead has cracked the code on making grocery delivery profitable and rapidly scalable—this could legitimately become a monster company.”
As Farmstead’s Bay Area hub nears profitability, the company has eyes on launching in additional cities in 2019.
“Farmstead is turning the grocery game on its head, leveraging technology to obtain huge efficiency gains,” said Stuart Peterson, founder of ARTIS Labs. “The work Farmstead is doing has wide implications, not only for consumer-facing grocery buying but for the whole supply chain. The fact that Farmstead is trending toward positive contribution margin already speaks volumes about the efficiency of their model. We’re really excited to be involved.”
Furthering its reputation for innovation in the grocery space, Farmstead in October announced a partnership with autonomous delivery van company Udelv to make grocery deliveries via self-driving vehicles on select routes in the Bay Area. The partnership makes Farmstead one of the first grocers in the country to delivery via autonomous vans and serves as an extension of the company’s mission to provide an efficient, eco-friendly grocery experience.
“We went into this business knowing that data would be the key to making our model sustainable,” said Farmstead CEO and co-founder Pradeep Elankumaran. “Our experience in the Bay Area has shown us that it’s possible to locally source and deliver groceries profitably. In the last year, we have turned all the tricky operational parts of our business into digital products that abstract away much of the complexity and drive profitability on each order. With our playbook in hand, we’re already laying the groundwork for aggressive geographic expansion in 2019.”
WANT BREAKING NEWS AT YOUR FINGERTIPS?
Get today’s need-to-know grocery industry intelligence. Sign up to receive texts from Winsight Grocery Business.