Hero Bread raises $21 million in new funding to expand its low-carb bakery business.
Hero Bread
Hero Bread, a California startup dedicated to producing an artisanal line of low-carb, high-nutrition baked goods, has raised $21 million in latest funding to fuel its product innovation and expansion of its retail sales.
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 showed that Hero Bread has already raised a $15 million Series B in 2023, bringing its post-money valuation to $155 million.
Bringing low-carb foods to the masses
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, Butter Cheese Biscuits, Hawaiian Rolls, White and Seed Bread, Hamburger and Hot Dog Buns, and Tortillas, are sold directly to the consumer 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 YuChiang Cheng, CEO of Hero Bread, the company was able to close the round in less than 90 days due to proven consumer demand, thereby increasing distribution, which led to increased investor interest.
“The fundraiser was a focused effort where we reached out to over 20 qualified, leading CPG investors who demonstrated their desire to invest in impactful CPG companies . We received a lot of interest… but Composite Ventures, who has been following us closely, responded very quickly and brought on board 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 more nationally, 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, alongside 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 such as Flowers Foods and Bimbo Bakeries have also recently forayed into the keto-friendly space.
Hero Bread’s secret to achieving minimal or zero net carbs is to use resistant wheat starch, a dietary fiber that cannot be fully broken down and digested, versus regular wheat starch which has 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 everything you buy,” he said. “We are in a process of continuous improvement to provide the best possible product. This means improving what we cook with: for example, cutting out seed oils and now using heart-healthy olive oil, how we cook and with which partners. Over the past several years, our team has worked extremely hard to build a strong 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 each year since its launch and plans to explore all high-carb categories in the future, according to Cheng.
“We are very committed to our omnichannel approach. We will continue to show strong growth in unit sales velocity at our current 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 do their purchases,” Cheng said. “We will easily double our sales year over year. Our strategy is simple, we strive to make the best product possible, help people be healthy by putting our bread in their hands and continue to build a healthy and valuable business.
