Farmstead, an online grocer that uses artificial intelligence (AI) to predict product demand, today announced that it has raised $2.2 million in venture funding from ARTIS Labs, Resolute Ventures, Y Combinator, Red Dog Capital and other investors. This brings the total amount raised by the company to $7.5 million.

Farmstead‘s hook is that its stores don’t overstock and try to carry every item. Instead, their goal is to carry just enough of the items people want so that have enough to meet demand, but not so much inventory that it goes to waste. As we wrote back in March:

[Farmstead] can get away with carrying such a small inventory because its AI platform predicts the items customers will want and orders just the right amount. To do this, Farmstead combines historical sales data and current trend data with consumer recommendations and external factors, such as holidays and product sell-by dates. Its machine learning processes these data points to assess which items to carry and how many it should stock at any given time.

At that time, Farmstead was focused on creating smaller micro-hubs that could be placed deeper into residential areas (because they are smaller, they could sidestep zoning restrictions). However, it seems like the company is moving away from that strategy somewhat. When I spoke with Farmstead CEO and co-founder Pradeep Elankumaran in October, he said that the company was actually using one larger facility in San Francisco.

In October, Farmstead announced that it had been running a pilot program delivering groceries via Udelv’s autonomous delivery vehicles. Udelv differs from other self-driving platforms in that it uses actual delivery vans. As we noted then, the idea of a van controlled by code is compelling for a grocery delivery company because of all the data it can collect, which can in turn be used to make delivery routes more efficient.

More than $3.5 billion has been invested in food and grocery delivery startups this year. Farmstead will need to bolster its coffers as it goes up not only against giant food retailers like Amazon and Walmart to sell you your food, but also well-funded delivery/logistics startups like Instacart, which have raised hundreds of millions of dollars to bring your groceries to your door.

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