(Bloomberg) — Hero Bread, which makes low-carbohydrate loaves, tortillas and buns, is in talks to raise a convertible note, according to a person with knowledge of the matter, making it the latest startup to seek non-traditional funding as private markets sputter.
The note is poised to convert at either a $400 million valuation or a 20% discount to the company’s next funding round, said the person, who asked not to be identified because the talks aren’t public.
A representative for San Francisco-based Hero Bread declined to comment.
The company has raised more than $30 million from investors including GreatPoint Ventures, DNS Capital and Marc Benioff’s Time Ventures.
Its athlete backers include Tom Brady and Kevin Durant.
Hero’s products are made by replacing standard flour with plant-based proteins and fibers, resulting in breads with only zero to one grams of net carbohydrates, compared with more than 20 grams of carbohydrates for a slice of conventional white bread.
They’re also higher in protein. The company currently sells sliced white bread, tortillas and buns for hot dogs and burgers, but has plans to expand, founder and Chief Executive Officer Cole Glass said in June.
“We are doing everything you can imagine with flour,” he said in an interview at the time, adding that whole wheat and rye variations are planned.
Sandwich rolls made by Hero Bread are available at more than 1,600 Subway shops.
The company plans to have its products in grocery stores by the end of the year, Glass said in June.
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