- Sword Health, an AI-driven virtual physical therapy startup, secures $30 million in funding and facilitates $100 million in equity sales for employees.
- Valuation soars to $3 billion, a 50% increase from Series D in 2021.
- CEO Virgílio Bento highlights initial plan for $100 million secondary round, expanded due to oversubscription.
- Capital infusion not essential for operations but serves to signal updated valuation amidst 2024’s challenging fundraising environment.
- Funds from primary round to be held in reserve for strategic purposes, bringing total funding to $340 million.
- Sword competes with Hinge Health, emphasizes stellar performance amid Hinge’s workforce reduction and IPO preparations.
- IPO potential for Sword in 2025 contingent on growth trajectory and market conditions.
- Introduction of AI voice “Phoenix” enhances patient engagement in therapy sessions.
Main AI News:
Sword Health, an innovative virtual physical therapy startup driven by AI, has successfully secured $30 million in funding and enabled its employees to vend $100 million in equity to both new and existing investors, with Khosla Ventures notably among them. This funding round catapults the nine-year-old firm’s valuation to a staggering $3 billion, marking a remarkable 50% surge from its Series D valuation of $2 billion back in November 2021.
Virgílio Bento, Sword’s visionary CEO and founder, revealed to TechCrunch that the company initially planned solely for a $100 million secondary round, facilitating employees and early backers to divest their shares. However, given the overwhelming response to the secondary round, Sword opted to also initiate a $30 million primary round, thereby revising its valuation upwards.
Bento emphasized, “It’s a very dynamic landscape: demanding schedules and lofty expectations. We sought to recognize the contributions of our team, particularly our early staff.” Despite being on track to achieve profitability by year-end, Bento clarified that Sword wasn’t in dire need of capital infusion. Nonetheless, he underscored the significance of signaling an updated valuation amidst the challenging fundraising milieu of 2024.
Reflecting on the prevailing market sentiment, Bento remarked, “The valuations of 2021 are largely viewed with skepticism, given the irrationality of the market.” While internal stakeholders are cognizant of the company’s robust performance, Sword’s clientele, which encompasses Fortune 500 employers and health plans, lacked a clear yardstick to assess its trajectory. “We aimed to spotlight our progress, and valuation serves as a tangible metric in that regard,” Bento elaborated.
The $30 million from the primary round won’t be allocated to operational expenses, clarified Bento, adding, “It will be strategically placed in reserves, accruing favorable interest.” With this infusion, Sword’s total funding reaches an impressive $340 million. Alongside Khosla Ventures, the company boasts a diverse investor base including General Catalyst, BOND, Founders Fund, among others.
Demonstrating Sword’s stellar performance assumes heightened significance as it contends directly with Hinge Health, another prominent virtual therapy platform valued at $6.2 billion as of October 2021. Notably, in April, Hinge undertook a workforce reduction of 10% as part of its profitability drive ahead of a potential IPO.
Looking ahead, Bento envisions an IPO for Sword, contingent on the company’s projected growth trajectory and favorable macroeconomic conditions. While a 2025 listing remains a possibility, Bento emphasized that the company isn’t tethered to a rigid timeline.
In parallel, Sword is fortifying its AI capabilities, introducing a human-like voice dubbed Phoenix for its musculoskeletal and women’s pelvic health therapy. Phoenix, the brain behind all patient interactions and virtual therapists, is hailed by Bento as the final piece of the puzzle, enhancing engagement significantly.
Conclusion:
The substantial funding and increased valuation of Sword Health signify a growing confidence in AI-driven virtual physical therapy platforms. With an eye on potential IPO and strengthened AI capabilities, Sword is poised to further disrupt the healthcare market, intensifying competition with rivals like Hinge Health. This underscores a broader trend towards technology-driven solutions in the healthcare sector, promising enhanced patient outcomes and investor returns alike.
