SWORD Health closes on $85 million Series C for virtual MSK care

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 differently, means that the New York-based company has now raised $110 million across six months.

CEO and founder of SWORD Health, Virgilio Bento, said that company was not actively having conversations with external VCs when it raised the round. The Series C closed within three weeks of the first anchor investor's check.

Given the interest of the market, given the valuations, and given the ability to bring other stellar investors [who] can help us grow even faster and more efficiently - that's why we decided to raise again," he said.

SWORD Health's massive tranche of capital comes as the world of MSK digital health startups continues to boom, thanks to the broad rise of virtual care. Venture-backed startups such as Kaia Health, which saw its business grow by 600% in 2020 and Hinge Health, which was last valued at $3 billion, are hitting growth stage. SWORD Health, while founded in 2015, has only been in the market for 18 months. Bento declined to share the company's exact valuation, but he confirmed that it was north of $500 million.

MSK conditions, which can range from a sprained ankle to a disc compression, are diverse and, unfortunately, universally felt. The sheer expansiveness of the condition has triggered a crop of entrepreneurs to create solutions that help people avoid surgery or addictive opioids, two of the mainstream ways to deal with MSK conditions.

SWORD Health's solution looks like this: The platform connects consumers to a virtual physical therapist who is accessible via traditional telemedicine. Beyond that, the company gives each consumer a tablet and motion sensors. The consumers are promoted to go through the motions, and get feedback and tips through a SWORD HealthDigital Therapist.

Musculoskeletal medical startups race to enter personalized health tech market

Nikhil Krishnan, the founder of Out-of-Pocket, explained how it all works through a first-person account:

As you go through them, the sensors + digital therapist can tell if the movements are correct and how far you're moving in each direction. The digital therapist has 5000 different types of feedback messages like don't bend your knee," lean forward more," and your squat form is more embarrassing than your Facebook etiquette circa 2009." You get a score of 1-5 stars depending on how far you move in a direction for a given exercise. My regimen was usually between 17-25 exercises and in total would take me 20-25 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 too worried about the behemoth.

It's really two different studies on how to build a healthcare company," Bento said. He pointed to how SWORD Health spent its first four years as a company developing its sensor, while he claims that Hinge went out to the market with a half-baked solution" in sensor technology.

That said, in March 2021, Hinge acquired medical device maker Enso to grow its non-invasive, musculoskeletal therapy tech, and continues to have the biggest marketshare among private startups in the sector.

The company touted that it has increased its number of treated patients 1,000% year over year, which has led to 600% year-over-year revenue growth. Given the fact that it's only been in the market for 18 months, these metrics don't provide an entirely holistic picture into the business, but instead offer a snapshot into the recent growth of an early-stage tool. With millions more, the SWORD Health founder is set to invest more in the company, and continue to not focus too much on profitability.

This is a big problem that we want to solve, so we really want to reinvest all of the gross profit that we are generating into building a platform that is able to deliver more value to patients," he said.