How Hero Bread raises $21 million in less than 90 days to accelerate its low-carb artisan bakery business
Hero Bread Raises $21 Million in Fresh Funding to Expand Low-Carb Baking Business
Hero Bread, a California-based startup dedicated to producing a line of artisanal, low-carb, high-nutrition baked goods, has raised $21 million in its latest funding round 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.
Bringing low-carb foods to the masses
Founded in 2021 by Cole Glass, who was born with severe pollen-related food allergies and had a strict diet with no vegetables, fruits or nuts, Hero Bread was first sold in select Subway restaurants. It quickly went viral with early support from athletes Tom Brady and Kevin Durant, as well as artists including The Weekend.
Hero Bread’s current offerings, including French croissants, butter cheese 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 due to proven consumer demand, increased 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 allows Hero Bread to fulfill its mission of bringing high-nutritional baked goods to all consumers by expanding more national distribution, supporting the growth of its current retail partners with promotions and creative samples, 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 like Flowers Foods and Bimbo Bakeries have also made forays into the keto-friendly realm recently.
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 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.”
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