US – Farmstead, a fast-rising US online grocery store has raised US$7.9 million in a Series A funding round backed by Aidenlair Capital, in an effort to accelerate its national expansion.

The latest round which featured investors such as Y Combinator, Duro, Maple VC, Heron Rock and Red Dog Capital  brings its total funding to date to US$14.5 million.

According to Farmstead, its business has grown “swiftly” in 2020 amid the pandemic prompting the startup to start focusing on securing more partnerships with grocery chains, increasing its delivery capacity and expanding the national brand.

The exponential growth of Farmstead can be partly attributed to the shifting consumer shopping choices which prefer online grocery shopping to instore buying.

According to U.S. Online Grocery Survey 2020 by Coresight Research, U.S. online grocery sales grew 22% in 2019 and, propelled by high demand from nationwide COVID-19 lockdowns, stand to surge about 40% this year.

Deborah Weinswig, founder and CEO of New York-based Coresight, attributed the dramatic shift to online buying to the coronavirus outbreak.

She said, The Corona virus has prompted shoppers to buy food and essentials online in greater numbers and more frequently.

“This year’s survey results saw a big increase in expectations to buy groceries online in the coming 12 months, and we suspect much of that is due to the impact of the coronavirus,” Weinswig projected.

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, the startup claims to 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.

The startups co-founder and CEO Pradeep Elankumaran says that his 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.”

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.

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