We got an exclusive look at the presentation that had VCs clamoring to invest in a startup taking a new approach to physical therapy
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- SWORD Health, a startup that provides remote physical therapy, raised $25 million in Series B funding from Transformation Capital and existing investors.
- Founder and CEO Virgilio Bento said he struggled to contain investor interest in the round, which closed on Christmas Day.
- We got an exclusive look at the presentation Bento used to win over his new investor and board member.
- Visit Insider’s homepage for more stories.
On Christmas Day, Virgilio Bento had a lot to celebrate.
His company, SWORD Health, had officially closed its latest funding round on the holiday to the tune of $25 million. It was the maximum amount he wanted to raise for the company’s Series B that came less than a year after its public launch in the US. Transformation Capital led the round, which also included existing investors Khosla Ventures and Founders Fund.
SWORD Health is just one of several startups hoping to reimagine physical therapy for a virtual world. It uses motion-tracking technology paired with treatment plans from credentialed doctors or physical therapists to provide remote-first relief for patients experiencing musculoskeletal conditions such as neck or shoulder pain.
The startup launched in the US in January 2020 after deploying its services in Europe and Australia, Bento told Insider. The timing, just prior to nationwide lockdowns in the US meant to contain the spread of the coronavirus, was both a benefit and a challenge, Bento said.
At first, the company grew rapidly as more patients were shut out of traditional physical therapy clinics. Shortly after, companies began reviewing the benefits they offered in the name of cost-cutting and SWORD, which makes profits based on large contracts with employers, suffered.
“COVID was a tailwind because it reinforced the need for patients to receive care at home, but it also had headwinds,” Bento said. “The self-insured employers stopped their search for new solutions, so there was a deceleration in the second quarter.”
Once the dust had settled, however, SWORD rebounded and then some, Bento said. The resulting growth, which Bento said includes the company’s 75% success rate in signing deals with companies they’ve pitched, was what caught investors’ eyes when he started thinking about ways to sustain the growth beyond the coronavirus pandemic.
“We saw this big growth in the third and fourth quarters, and we understood that the operational needs would require additional funding to deliver in the first and second quarters this year,” Bento said. “We knew we should raise again by the end of the year, and we took that decision forward in a very fast process.”
Bento is based on Portugal and met with investors entirely remotely in what he called an “incredibly efficient” fundraising process. Although he said he missed the face-to-face time with his new lead investor, Transformation Capital, he predicted that he would replicate the earlier stages of the process even in a post-COVID-19 world.
SWORD Health shared a copy of the presentation it used to win over investors remotely to raise $25 million in Series B funding.
SWORD Health is a startup that provides virtual physical therapy care.
Founder and CEO Virgilio Bento focused on reinventing technology for physical therapy while he was getting his doctorate in electrical engineering. He had witnessed the industry’s stagnation and low-tech solutions after his brother woke from a 12-month coma and required physical therapy care.
Private investors have been keen to invest in startups like SWORD, which are typically referred to as MSK companies. Bento said the interest is a result of increased spending and rising costs in the industry.
SWORD Health works with insurance companies and employers to provide care to employees at no cost to them. It earns money through its contracts with employers. The below slide highlights the range of expenses self-insured employers take on, with musculoskeletal care ranking higher than mental health and cancer care costs combined.
SWORD Health patients have access to credentialed doctors and physical therapists to address a range of physical therapy conditions, such as neck or wrist pain. Bento said it is one of just a few companies that can compete with what he called the “gold standard” of in-person physical therapy.
SWORD Health first launched in Europe and Australia prior to entering the US market in January 2020. Bento declined to specify its valuation or number of customers in the US.
SWORD competes with companies like Hinge Health, another MSK startup that has been popular with VCs. Bento said that SWORD’s differentiating factors are that it treats multiple conditions instead of focusing on just a few and that it works with licensed doctors and therapists instead of nondescript health coaches. Hinge Health is modeled similarly, but primarily focuses on chronic back and joint pain compared to SWORD’s wider range of conditions.
Bento said that, when compared to in-person physical therapy, SWORD Health patients recovered 8 weeks faster on average in a company-published study. He said it could be due to the relatively flexible nature of remote care that patients can easily fit into their schedules.
You can find the full study here.