Sword health, a virtual musculoskeletal care platform founded in 2015, announced today that it has raised an $ 85 million Series C funding round led by General Catalyst. Other participating investors included BOND, Highmark Ventures, BPEA, Khosla Ventures, Founders Fund, Transformation Capital, and Green Innovations. The funding comes months after the company raised a $ 25 million Series B round, which, put another way, means the New York-based company has now raised $ 110 million in six months.
CEO and founder of SWORD Health, Virgílio Bento, said the company was not having active discussions with outside venture capitalists when it raised the round. Series C closed within three weeks of the first anchor investor’s check.
“Given the market interest, valuations and the ability to attract other stellar investors [who] it can help us grow even faster and more efficiently, which is why we decided to scale up again, ”he said.
As mentioned, SWORD Health’s massive capital tranche comes as the world of MSK digital health startups continues to boom thanks to the vast increase in virtual care. Startups backed by companies like Kaia Health, which saw its business grow by 600% in 2020, and Hinge Health, which was last valued at $ 3 billion, are in the growth stage. SWORD Health, although founded in 2015, has only been on the market for 18 months. Bento declined to share the exact valuation of the company, but confirmed that it was above $ 500 million.
MSK conditions, which can range from an ankle sprain to disc compression, are diverse and unfortunately felt universally. The sheer breadth of the condition has prompted a host of entrepreneurs to come up with solutions that help people avoid surgery or addictive opioids, two of the main ways to deal with MSK conditions.
SWORD Health’s solution looks like this: the platform connects consumers with a virtual physical therapist who can be accessed through traditional telemedicine. Beyond that, the company gives each consumer a tablet and motion sensors. Consumers are encouraged to follow the movements and get feedback and suggestions through a SWORD Health digital therapist.
As you review them, the sensors + the digital therapist can tell if the movements are correct and how far you are moving in each direction. The digital therapist has 5000 different types of feedback messages like “don’t bend the knee”, “lean further forward” and “your squat form is more embarrassing than your Facebook tag circa 2009.” You get a score of 1 to 5 stars depending on how far you move in one direction for a given exercise. My regimen was generally between 17 and 25 exercises and in total it took me between 20 and 25 minutes.
SWORD Health sells to insurers, health systems, and employers in the United States, Europe, and Australia.
SWORD Health’s biggest competitor is Hinge Health, last valued at $ 3 billion. However, for now, Bento isn’t overly concerned about the giant.
“They are really two different studies on how to build a healthcare business,” Bento said. He noted how SWORD Health spent its first four years as a company developing its sensor, while claiming that Hinge came to market with “a half-solution” in sensor technology. That said, in March 2021, Hinge acquired medical device maker Enso to grow its non-invasive musculoskeletal therapy technology, and continues to have the largest market share among the new private companies in the sector.
The company touted that it has increased its number of treated patients by 1000% year over year, leading to 600% revenue growth year over year. Given the fact that it has only been on the market for eighteen months, these metrics do not provide a completely holistic picture of the business, but rather provide a snapshot of the recent growth of an early stage tool. With millions more, the founder of SWORD Health is willing to invest more in the company and continue without focusing too much on profitability.
“This is a big problem that we want to solve, so we really want to reinvest all the gross profits that we are generating in building a platform that is capable of offering more value to patients,” he said.