On-demand delivery fulfillment startup Darkstore raises $1.4 million seed round

Darkstore, the startup that enables brands to offer same-day delivery, recently closed a $1.4 million seed round from PivotNorth — the same firm that led the seed round for same-day delivery darling Deliv. As part of the deal, PivotNorth CEO Tim Connors will join Darkstore’s board of directors. Thanks to the new funding, Darkstore will expand from just three markets to seven with the launch of its service in Los Angeles, Chicago and Seattle.

Darkstore has also brought on an additional brand customer, premium headphones maker Master & Dynamic, to offer one-hour delivery in New York City. Darkstore’s other partners include brands like clothing company Wildfang and mattress startup Tuft & Needle.

“With Darkstore and business-to-business, there’s slower customer acquisition but higher retention,” Hnetinka said. “It’s the opposite for something like WunWun (Hnetinka’s last startup that didn’t pan out so well).

Since launching last May, Darkstore has grown 120% month over month in orders and has facilitated shipments of $1.7 million worth of goods as of December. Hnetinka said $900,000 of that was just from November and December. With the funding, Darkstore’s goal is to hit $110 million worth of products fulfilled.

Darkstore works by exploiting excess capacity in storage facilities, malls and bodegas and enables them to be fulfillment centers with just a smartphone. The idea is that brands without local inventory can store it in a Darkstore and then ship out same-day. Darkstore doesn’t charge brands anything to store inventory, but charges 3% per item that leaves Darkstore, with a minimum of $2 and a maximum of $20.

When it comes to actual deliveries, Darkstore partners with companies like AxleHire and UberRUSH in San Francisco. In other markets, Darkstore uses services like Deliv and other local courier companies the brand wants to use.

Prior to this round of funding, Darkstore received a $120,000 strategic investment from R/GA Ventures, as part of its participation in the R/GA + Westfield Labs Connected Commerce Accelerator.