Sword Health, a prominent AI-powered digital healthcare firm, has secured $40 million in new funding, propelling its valuation to $4 billion—an increase of approximately 33% from the $3 billion valuation it held less than a year ago. The latest funding round was spearheaded by existing investor General Catalyst, with participation from other notable investors including Khosla Ventures, Comcast Ventures, Lince Capital, Oxy Capital, Armilar, Indico Capital and Shilling, bringing the startup’s total funding to $380 million.
Founded a decade ago, Sword Health initially established itself as a virtual physical therapy provider and subsequently expanded its services to include mental health and pelvic care. Despite being cash-flow positive, founder and CEO Virgílio Bento noted that raising additional funds served a dual purpose—to update the company’s valuation and ensure cash on hand for strategic acquisitions.
While Sword Health had previously signaled an ambition to pursue an IPO around 2025, Bento indicated a significant shift in that timeline. He now anticipates that the company will remain private for a number of years, with a potential IPO likely delayed until at least 2028. Bento explained the change by citing the extensive expansion he envisions for “Phoenix,” Sword’s AI-driven health platform. Currently used for musculoskeletal and pelvic health management, Bento intends to scale Phoenix to additional verticals, including cardiovascular care, gastroenterology, and speech therapy.
“I want to IPO when I have multiple points of validation, across diverse care categories, all at significant scale,” Bento remarked. “That’s why we’re looking at a much later timetable—possibly 2028.”
In preparing for eventual public-market debut, Bento has consulted extensively with senior executives and financial leaders experienced in managing public corporations. He concluded from these consultations that the rationale traditionally cited for going public—such as brand enhancement or improved access to capital—is not compelling enough compared to the advantages of staying private. Bento referenced highly successful private companies like Ikea and Lego, and pointed to Databricks’ recent $10 billion private funding round as evidence of continued robust private market funding availability. Moreover, liquidity needs for early investors and employees can be effectively met through private secondary transactions, he argued, adding that Sword planned to initiate a tender offer soon.
Looking ahead, Bento predicted another capital raise next year, likely continuing the numerical symmetry of recent rounds. “Last year we raised $30 million at $3 billion, this year it’s $40 million at $4 billion. It’s easy enough to forecast—next year we’re probably securing $50 million at a $5 billion valuation. It’s a pattern I enjoy,” he said.
