AI startup Sword Health raises $40M at a $4B valuation
Digital health startup Sword Health has secured a fresh $40 million in funding at a $4 billion valuation, marking a 33% increase from its $3 billion valuation just a year ago. The round was led by returning backer General Catalyst, with participation from Khosla Ventures, Comcast Ventures, and several other investors. This new capital brings the company’s total funding to $380 million.
While Sword is cash-flow positive and generating a strong $240 million annual revenue run rate, CEO and founder Virgílio Bento says the decision to raise wasn't out of necessity. Instead, it was a strategic move to update the company's valuation and build reserves for acquisitions.
From Virtual PT to Comprehensive Digital Care
Founded a decade ago, Sword Health started as a virtual physical therapy platform aimed at treating musculoskeletal conditions. Since then, it has broadened its scope, expanding into pelvic health and mental health, with plans to push further into cardiovascular, gastrointestinal, and speech therapy — all powered by its AI care platform, Phoenix.
Bento envisions Phoenix evolving into a comprehensive digital care specialist capable of managing a wide array of chronic and acute conditions remotely. This aligns with Sword’s broader ambition to reshape digital healthcare with scalable, AI-driven tools that go far beyond traditional virtual therapy.
IPO? “Much Later Than Everyone Expects”
Despite earlier discussions around a 2025 IPO, Bento has significantly pushed back those plans. “It’s going to be much later than everyone expects,” he told TechCrunch, now pointing to 2028 as a more likely timeframe. His reasoning is blunt: “If you ask me why we shouldn’t IPO, I can give you 10 reasons. If you ask me why we should, I can’t find one.”
Rather than follow peers like Hinge Health and Omada into the public markets, Bento has chosen a more deliberate path. After a self-described “educational journey” speaking with CEOs of public companies and bankers, he concluded that remaining private offers more strategic flexibility, especially as private markets continue to provide strong access to capital.
He also noted that employee liquidity — a common reason startups go public — is still achievable privately, and Sword plans a tender offer next month to give early shareholders and employees a path to sell.
Eyes on $5 Billion
With strong financials, rising valuation, and continued investor interest, Bento hinted at what’s next: a potential $50 million raise at a $5 billion valuation next year. “I like the numerical symmetry,” he said. “I think it’s fun.”
Looking Ahead
Sword Health’s disciplined approach to growth, combined with a focus on AI-powered care and a refusal to rush into the public markets, sets it apart in a crowded digital health landscape. With its Phoenix platform as the centerpiece and a growing list of care verticals in sight, Sword is positioning itself as one of the most ambitious — and self-assured — players in modern healthcare.
