Sword Health just raised $40 million at a $4 billion valuation. That’s up 33% from last year’s $3 billion. General Catalyst led the round, returning to back the 10-year-old AI digital health startup.
The company is already cash-flow positive but CEO Virgílio Bento decided to raise to update the valuation and fuel strategic acquisitions.
Sword Health started as a virtual physical therapist. Now it covers pelvic health and mental health services too. The startup previously eyed an IPO around 2025. Not anymore. 
Bento told TechCrunch the IPO is getting pushed back.
“It’s going to be much later than everyone expects,” Bento said.
He wants to IPO only after proving Sword’s AI care specialist, Phoenix, works at scale in more care areas: cardiovascular, gastroenterology, speech therapy, and more.
“I want to IPO when I have lots of different proof points at scale in many different care verticals — so maybe 2028,” he said.
Bento has been meeting public company CEOs and bankers for an “educational journey.”
He’s skeptical about the usual IPO reasons like brand building or capital raising.
“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,” Bento explained.
He points to Ikea, Lego, and Databricks as examples of thriving private companies with big funding rounds. Liquidity for employees and shareholders is easy through secondary markets. Sword plans a tender offer next month.
Sword is gearing up for a bigger fundraise next year.
“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,” Bento said. “I like the numerical symmetry. I think it’s fun.”
This round brings Sword Health’s total funding to $380 million. Other investors include Khosla Ventures, Comcast Ventures, Lince Capital, Oxy Capital, Armilar, Indico Capital, and Shilling.
