Sword Health nabs $40M at $4B valuation, pushes IPO plans to at least 2028

Sword Health, an AI-powered digital health startup, has raised $40 million at a $4 billion valuation, a 33% jump from the $3 billion price tag it earned just a year ago. The funding was led by returning investor, General Catalyst.

Even though 10-year-old Sword Health is cash-flow positive, its CEO and founder, Virgílio Bento, told TechCrunch that he opted to raise additional capital for two key reasons: to update the company’s valuation, and have funds readily available for strategic acquisitions.

Sword Health, which began as a virtual physical therapist and has since expanded into offering pelvic health and mental health services, had previously considered a near-term IPO. Bento told TechCrunch last year that a 2025 listing was a possibility.

Despite the recent successful IPOs of counterparts Hinge Health and Omada, and Sword’s healthy $240 million annual revenue run rate, Bento is reconsidering his IPO plans.

“It’s going to be much later than everyone expects,” he said.

Bento’s goal is for Phoenix, Sword’s AI care specialist, to extend remote healthcare beyond musculoskeletal pain and pelvic floor care to numerous conditions, such as cardiovascular care, gastroenterological health, and speech therapy.

“I want to IPO when I have lots of different proof points at scale in many different care verticals — so maybe 2028,” he said.

In recent months, Bento has embarked on what he calls an “educational journey” to learn about managing a public company, speaking with CEOs of various public companies and bankers.

“At the end of that education period, I realized that if you ask me why we shouldn’t IPO, I can give you 10 reasons. If you ask me why we should IPO, I cannot find one reason,” he said.

Bento isn’t convinced by the typical reasons for an IPO, such as brand building or capital access. Pointing to Ikea and Lego as examples of successful private companies, he said strong startups can still secure ample private capital, citing Databricks’ massive $10 billion raise.

Liquidity for employees and early shareholders is also easily attainable for private companies thanks to secondary markets, Bento said, adding that Sword will likely launch a tender offer next month.

Sword expects to raise more capital next year, Bento said. He’s even predicting the size and valuation of the company’s next funding round.

“Last year, we raised $30 million at a $3 billion valuation. This year, we did $40 million at $4 billion. I think you can imagine the type of raise we’re going to do next year, which is probably going to be $50 million at $5 billion,” he said. “I like the numerical symmetry. I think it’s fun.”

The latest round brings Sword’s total funding to $380 million. Other participants in the new round include Khosla Ventures, Comcast Ventures, Lince Capital, Oxy Capital, Armilar, Indico Capital and Shilling.