Hero Bread, a Californian startup dedicated to producing an artisanal line of low-carb and high nutrition baked goods, has amassed $21 million in latest financing to fuel their 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 set to accelerate the company’s mission of delivering nutrient-rich bread to a wider audience. PitchBook showed Hero Bread previously raised a $15 million series B back in 2023, putting its post-money valuation at $155 million.
Bringing Low-Carb Foods To Mass Audience
Founded in 2021 by Cole Glass, who was born with severe food allergies related to pollen and had a strict diet without vegetables, fruits, or nuts, Hero Bread first entered the market at select Subway restaurants. It quickly went viral with early backing from athletes Tom Brady and Kevin Durant, as well as recording artists, including The Weekend.
Hero Bread’s current offerings, including French Croissants, Buttery Cheese Biscuits, Hawaiian Rolls White & Seeded Bread, Burger & Hot Dog Buns and Tortillas, are sold direct-to-consumer via the company’s website, as well as across over 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’s CEO YuChiang Cheng, the company was able to close the round in less than 90 days thanks to its proven consumer demand, increasing distribution that resulted in an uptick in investor interest.
“The fundraise was a focused effort where we reached out to over 20 qualified leading CPG investors who have a proven desire to invest in impact CPG companies. We got a lot of interest… but Composite Ventures who has been following us closely moved very quickly and rallied Cleveland Avenue, DNS, and GreatPoint Ventures,” Cheng wrote me via email.
“This new funding empowers Hero Bread to fulfill its mission to bring high nutritional baked goods to all consumers by building out more national distribution, support growing its current retail partners with creative promotions and sampling, while continuing to invest in new product innovation.”
Leveraging Resistant Wheat Starch
Bread, alongside many major carbohydrate-rich foods, has been at the center of reinvention among low-carb and keto-focused brands, notably BetterBrand and Sola. Heavyweights in the category, such as Flowers Foods and Bimbo Bakeries, have also forayed into the keto-friendly space recently.
The secret for Hero Bread to achieving minimal to zero net carb is using resistant wheat starch, a dietary fiber that cannot be fully broken down and digested, compared to regular wheat starch containing high net carbs that turn into sugars absorbed by the body during digestion, according to information provided through the company’s website.
Cheng stressed how it took three years for Hero Bread to prefect its formulation, and the company will continue iterating its products. “Our test kitchen is a former restaurant, and we really bake all of the products you buy,” he said. “We are on a continuous improvement journey to deliver the best product we can. This means improving what we bake with: for example, removing seed oils and now using heart-healthy olive oil, how we bake and with which partners. Over the last few years our team has worked extremely hard to build a strong manufacturing system which 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 categories that are rich in carbohydrates moving forward, according to Cheng.
“We are very committed to our omni-channel approach. We will continue to show strong unit sales velocity growth at our current retail partners and also open a lot more retail doors in 2024 to make sure we can bring our bread to consumers where they like to shop,” said Cheng. “We will easily double sales year over year. Our strategy is simple, we are very focused on making the best product we can, help people be healthy by getting our bread in their hands and continue to build a healthy valuable business.”