Sword Health Raises $40 Million at $4 Billion Valuation
Sword Health, a digital health startup powered by artificial intelligence, has recently secured $40 million in funding at a valuation of $4 billion. This marks a significant 33% increase from its $3 billion valuation just a year ago. The funding round was led by General Catalyst, a returning investor.
Although Sword Health has been operating profitably for the past ten years, CEO and founder VirgÃlio Bento decided to raise additional capital for two main reasons. Firstly, to update the company’s valuation, and secondly, to have funds readily available for potential strategic acquisitions.
Expansion and Future Plans
Originally starting as a virtual physical therapy platform, Sword Health has since expanded its services to include pelvic health and mental health offerings. The company had been considering an initial public offering (IPO) in the near future, with a potential listing as early as 2025. However, despite its $240 million annual revenue run rate and the successful IPOs of similar companies like Hinge Health and Omada, Bento is now reconsidering the timing of Sword Health’s IPO.
Bento’s vision for Sword Health’s AI care specialist, Phoenix, extends beyond musculoskeletal and pelvic health to encompass various other medical conditions, including cardiovascular care, gastroenterological health, and speech therapy. This ambitious plan aims to revolutionize remote healthcare delivery on a large scale.
Postponing IPO Plans
Despite his initial plans for an IPO, Bento now anticipates delaying the public offering until 2028 to ensure the company has established a strong presence across multiple care verticals. He has been actively engaging in an “educational journey” to understand the nuances of managing a public company, seeking advice from industry experts and financial professionals.
While the conventional reasons for pursuing an IPO such as brand building and accessing capital are valid, Bento is not convinced of its necessity for Sword Health. He believes that private companies like Ikea and Lego have demonstrated long-term success without going public, and that ample private capital can still be secured, as evidenced by Databricks’ recent funding round.
Future Growth and Funding Predictions
Looking ahead, Bento foresees raising additional capital in the coming year and predicts a further increase in the company’s valuation. With the latest funding round bringing Sword Health’s total funding to $380 million, Bento anticipates continued growth and expansion. He envisions a future funding round of $50 million at a valuation of $5 billion, maintaining a numerical symmetry that he finds enjoyable.
In addition to General Catalyst, other participants in the recent funding round include Khosla Ventures, Comcast Ventures, Lince Capital, Oxy Capital, Armilar, Indico Capital, and Shilling.
Overall, Sword Health’s latest funding round and strategic plans for future growth position the company as a key player in the digital health sector, poised for continued success and innovation in the years to come.