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Eight months after raking in $163 million, Sword Health CEO Virgílio Bento tells Axios that his digital musculoskeletal company’s cash runway extends through the middle of 2025.

Why it matters: Many digital health and health tech startups are navigating increasingly muddy waters with the IPO markets shut down, exit pathways less certain, and venture investors more discerning.  

Bentos says Sword was approached by SPACs last year but IPO optionality isn’t something he’s focused on today: “When it happens, it happens.”

Context: Sword's Sapphire Ventures-led Series D round in November (just five months after its Series C) propelled its valuation to $2 billion — reflecting 20x valuation growth in 12 months in concert with 12x client growth.

Investors include General Catalyst, Khosla Ventures, Founders Fund, Bond, Transformation Capital and several others. 

How it works: Sword, whose offerings are sold to employers, connects members with physical therapists 24/7 as needed. It provides wearable technology to monitor movement, prevent injury, and capture data during exercise, as well as educational content.

Zoom in: Sword recently entered the women’s health category after discovering what is a large and overlooked pain point.  

The company created Bloom, a separate offering leveraging motion sensor-based technology to address and relieve pelvic pain for women.  

Yes, but: Sword has made two acquisitions to date (Vigilant Technologies in 2021 and Bright Technologies in January) and expects to be active in M&A over the next two years. 

Sword buys for distribution channels, geographic footprints, or a "stellar team," Bento says. "We’ve never bought a company because of a product they had," he adds.   

Of note: When asked what advice Bento has for health tech founders in today’s market, he says, don’t always take what others are saying word for word.

“I still recall very vividly in February and March 2020, when the COVID outbreak happened, everyone [top VCs] telling me I should lay off 20% of my workforce because the world is going crazy,” Bento says. “If we did that, we wouldn’t be where we are now.” 

Sword, rather, kept hiring aggressively — banking on the fact that an at-home model would be well-positioned in a world where everyone would be stuck at home for months.

Yes, and: Understand what questions VCs are going to ask you 12 to 18 months before fundraising, Bento says.

Whether it's around the cost of acquiring a customer or how many deals you're winning, “then, when you get to that meeting, you have a beautiful chance to show them [what they want to see],” he says. 

The big question Bento prepped for ahead of its Series B: What’s your ability to compete against your direct competition?  

Bento asserts that Sword, starting in 2020 and every year since that time, has demonstrated it wins 70%-75% of business when competing with top competitor Hinge Health.  

By Sword's Series D raise, the big question was: How do you increase unit economics and gain as much market share going forward as possible?

Between the lines: “Now, the holy grail of stellar companies is exponential growth with an almost equal exponential increase in unit economics. It gets harder the [more] you grow,” Bento says.

The bottom line: Sword is not near profitability, but has a lot of bandwidth (and capital behind it) for business building.  

“We don’t want to be a company making sending pills to the home more efficient; that’s exactly what we are trying to destroy in the MSK space,” Bento says. 

The most pertinent question in front of Bento now: "What are the sources of pain in the world and how can we use technology to solve it?"

Sword Health well-stocked to weather any funding storm

The CEO says the company's funding can get it to mid-2025.

Photo illustration of Sword CEO "V" Bento, with abstract shapes.

Photo illustration: Allie Carl/Axios. Photo: Sword

Health tech deals

Eight months after raking in $163 million, Sword Health CEO Virgílio Bento tells Axios that his digital musculoskeletal company’s cash runway extends through the middle of 2025.Why it matters: Many digital health and health tech startups are navigating increasingly muddy waters with the IPO markets shut down, exit pathways less certain, and venture investors more discerning.

Sword Health well-stocked to weather any funding storm

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