Hero Bread raises $21 million in new funding to expand its low-carb baking business.
Hero Bread
Hero Bread, a California-based startup dedicated to producing an artisanal line of low-carb, high-nutritional baked goods, has raised $21 million in its latest funding to fuel its product innovation and retail expansion.
This funding round, co-led by Cleveland Avenue, DNS Capital and Composite Ventures with additional participation from existing investor Greatpoint Ventures, is expected to accelerate the company’s mission to bring nutrient-dense bread to a broader audience. PitchBook has shown that Hero Bread has already raised a $15 million Series B in 2023, bringing its post-money valuation to $155 million.
Offering low-carb foods to the general public
Founded in 2021 by Cole Glass, who was born with severe pollen-related food allergies and followed a strict diet without vegetables, fruits or nuts, Hero Bread first hit the market in select Subway restaurants. It quickly went viral thanks to early support from athletes Tom Brady and Kevin Durant, as well as recording artists including The Weekend.
Hero Bread’s current offerings, including French croissants, cheese and butter biscuits, Hawaiian rolls, white and seeded bread, hamburger and hot dog buns and tortillas, are sold directly to consumers through the company’s website, as well as at more than 4,000 retailers, including Publix, Sprouts Farmers Market, Albertsons, Safeway, QFC, Market District, Giant Eagle, Heinen’s, Central Market, Woodman’s and Fresh Thyme.
According to Hero Bread CEO YuChiang Cheng, the company was able to close the round in less than 90 days thanks to proven consumer demand, increasing distribution which led to increased investor interest.
“The fundraising was a focused effort where we reached out to over 20 leading qualified investors in the FMCG sector who demonstrated their willingness to invest in impactful FMCG companies . We received a lot of interest…but Composite Ventures, who had been following us closely, reacted very quickly and brought in Cleveland Avenue, DNS and GreatPoint Ventures,” Cheng wrote to me by email.
“This new funding enables Hero Bread to fulfill its mission of bringing nutritionally rich baked goods to all consumers by expanding its distribution to a more national level, supporting the growth of its existing retail partners with creative promotions and sampling, while continuing to invest in new product innovation.”
Harnessing resistant wheat starch
Bread, along with many high-carb foods, has been at the center of the reinvention of low-carb and keto-focused brands, including BetterBrand and Sola. Category heavyweights like Flowers Foods and Bimbo Bakeries have also made forays into the keto-friendly space recently.
Hero Bread’s secret to achieving minimal to zero net carbs is to use resistant wheat starch, a dietary fiber that cannot be fully broken down and digested, unlike regular wheat starch, which contains high net carbs that turn into sugars that are absorbed by the body during digestion, according to information provided on the company’s website.
Cheng noted that it took Hero Bread three years to perfect its formulation, and the company will continue to iterate its products. “Our test kitchen is a former restaurant, and we actually cook every product you buy,” he said. “We’re on a journey of continuous improvement to deliver the best possible product. That means improving what we cook with—for example, removing seed oils and now using heart-healthy olive oil—how we cook, and with whom we partner. Over the past few years, our team has worked extremely hard to build a robust manufacturing system that will support our rapid growth, in terms of capacity, quality, and sustainable unit economics.”
Hero Bread’s sales have more than doubled every year since its launch and plans to explore all high-carb categories in the future, Cheng said.
“We are very committed to our omnichannel approach. We will continue to see strong unit velocity growth across our existing retail partners and will also open many more retail doors in 2024 to ensure we can bring our bread to consumers where they love to shop,” Cheng said. “We will easily double our sales year-over-year. Our strategy is simple, we are focused on making the best product possible, helping people be healthy by putting our bread in their hands, and continuing to build a healthy and valuable business.”
