Sword Health raises $130M and its valuation soars to $3B

Sword Health, an AI-powered virtual physical therapy startup, raised $30 million and enabled employees to sell $100 million in equity to investors like Khosla Ventures. This increased the company's valuation to $3 billion, a 50% jump from its $2 billion valuation in November 2021. Initially, the company planned only the $100 million secondary round, but due to high demand, it also conducted a $30 million primary round to update its valuation.

CEO Virgílio Bento mentioned that despite forecasting profitability by year-end, the updated valuation was crucial to signal growth in a tough fundraising environment. The $30 million raised will be kept in the bank rather than used for operations. Sword Health now has a total funding of $340 million, with investors including General Catalyst, BOND, and Founders Fund.

Competing with Hinge Health, which was valued at $6.2 billion in 2021, Sword aims for an IPO by 2025, contingent on favorable conditions. The company is also advancing its AI, introducing a human-like voice for its genAI, Phoenix, to enhance patient engagement in its virtual therapy programs.

In the meantime, Sword Health is enhancing its AI capabilities. It is introducing a human-like voice for its generative AI, named Phoenix, to its musculoskeletal therapy and women's pelvic health care therapy. Phoenix powers all patient interactions and the company’s virtual therapists. Bento described this development as "the last piece of the puzzle" to make Phoenix much more engaging for users.