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Sword Health: AI-Powered Virtual Physical Therapy Freeing The World from Pain

Image Credits: Sword Health
By: Headliners News / June 26, 2024

Meet Sword Health, an AI-powered virtual physical therapy startup, has recently secured $30 million in new funding and facilitated a $100 million equity sale for employees and early investors. This recent financial maneuver has boosted the company’s valuation to $3 billion, a notable increase from its $2 billion valuation during the Series D round in November 2021.

Initially, Sword Health aimed to conduct a $100 million secondary round to enable share sales by employees and early backers. However, due to oversubscription, the company also opted to raise a $30 million primary round, thereby updating its valuation. Virgílio Bento, Sword’s CEO and founder, emphasized the importance of rewarding their team, particularly early employees, given the intense work environment characterized by long hours and high expectations.

Despite not needing the additional capital, Sword Health pursued the primary round to signal its robust growth amid challenging fundraising conditions in 2024. Bento pointed out that while employees are aware of the company’s success, clients—comprising employers and health plans from Fortune 500 companies—benefit from the updated valuation as a tangible indicator of progress.

The newly raised $30 million will not be used for operational expenses but will remain in the bank, accruing interest. This primary round brings Sword Health’s total funding to $340 million. Key investors include Khosla Ventures, General Catalyst, BOND, Founders Fund, and others.

Sword Health operates in a fairly competitive landscape, directly challenging Hinge Health, another virtual therapy platform valued at $6.2 billion back in October 2021. Hinge Health recently laid off 10% of its workforce to aim for profitability and prepare for a potential IPO. Bento also envisions an IPO for Sword Health, potentially by 2025, depending on growth and macroeconomic conditions.

In the interim, Sword Health is enhancing its AI capabilities, particularly with its genAI named Phoenix. Phoenix, which powers all patient interactions and virtual therapists, is being updated with a human-like voice to make the therapy experience more engaging for users. This advancement represents the final piece in making Phoenix a more interactive and effective component of Sword Health’s virtual therapy offerings.

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