Sword Health, an innovative AI-powered virtual physical therapy startup, has successfully raised $30 million in a primary round of funding. In addition, the company’s employees have sold shares worth $100 million to new and existing investors, including Khosla Ventures. This development brings Sword Health’s valuation to a staggering $3 billion, marking a 50% increase from its previous value of $2 billion in November 2021.
Background and Initial Plans
According to an interview with TechCrunch, Virgílio Bento, CEO and founder of Sword Health, had initially planned to conduct only the secondary round, which would allow employees and early investors to sell shares. However, when he realized that the secondary round was oversubscribed, the company decided to raise a $30 million primary round and update its valuation.
Reasons Behind the Funding Round
Bento explained that Sword Health didn’t require the influx of capital due to its forecasted profitability by the end of the year. Nevertheless, he believed that updating the valuation would send a positive signal during the challenging fundraising conditions of 2024. The CEO emphasized that while most employees are aware of the company’s growth, clients – including employers and health plans of Fortune 500 companies – had no clear way to gauge Sword Health’s progress.
"We wanted to showcase our growth, and valuation is one indicator of that," Bento stated.
Future Plans and Competition
Sword Health competes directly with another virtual therapy platform, Hinge Health, which was valued at $6.2 billion in October 2021. In April, Hinge laid off 10% of its workforce as part of its plan to reach profitability before a potential IPO. Bento expressed his goal for Sword Health’s future and mentioned that if the company continues to grow as expected and the macroeconomic environment is favorable, it could potentially list in 2025.
However, the company is not committed to a specific timeline, and Bento emphasized that there are no immediate plans for an Initial Public Offering (IPO).
Beefing Up AI Capabilities
Sword Health is enhancing its AI capabilities by introducing a human-like voice for its genAI, named Phoenix. This advancement will be integrated into musculoskeletal therapy and women’s pelvic health care therapy, with Phoenix powering all patient interactions and Sword Health’s virtual therapists.
"It’s the last piece of the puzzle that makes Phoenix much more engaging," Bento said.
Investors and Funding
Sword Health has secured funding from top-tier investors, including Khosla Ventures. The company’s total funding now stands at $340 million, with its latest primary round bringing in an additional $30 million.
In addition to the recent funding, Sword Health will not use the capital for operations but instead keep it in the bank, generating interest. This strategic decision reflects the company’s confidence in its financial prospects and growth potential.
Conclusion
Sword Health’s updated valuation of $3 billion is a testament to the company’s success and innovative approach to virtual physical therapy. With its AI-powered platform and commitment to patient engagement, Sword Health is poised for continued growth and expansion in the healthcare industry. As the company continues to push boundaries and enhance its capabilities, it will be interesting to see how Sword Health navigates the competitive landscape and achieves its ambitious goals.
About Sword Health
Sword Health is an AI-powered virtual physical therapy startup that aims to revolutionize the way patients receive care. With a focus on musculoskeletal therapy and women’s pelvic health care, Sword Health offers a comprehensive platform for patient interactions and treatment planning. The company’s commitment to innovation and patient-centered care has earned it recognition as one of the leading startups in the healthcare industry.
Investors
Sword Health has secured funding from top-tier investors, including:
- Khosla Ventures
- General Catalyst
- BOND
- Founders Fund
These investors have contributed to Sword Health’s growth and success, and their ongoing support is crucial for the company’s continued expansion.
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