Sword Health Raises $40M to Launch AI-Powered Mental Health Platform

Sword Health is betting big on mental health with a $40 million funding round and the launch of Mind, an AI-powered platform that combines wearable technology with human therapists to treat depression and anxiety. The expansion marks a major strategic shift for the 10-year-old company, which built its reputation in digital physical therapy and pain management.

The Portuguese-founded, New York-based startup secured the Series D funding from General Catalyst, with participation from Khosla Ventures and Comcast Ventures. The round values Sword at $4 billion and brings its total funding to nearly $500 million since inception.

Mind represents Sword's first venture beyond physical health, targeting the $280 billion global mental health market with what CEO Virgílio Bento calls "always-on" care. The platform pairs a wrist-worn device called the M-band with AI agents and licensed mental health professionals to deliver real-time interventions for users experiencing anxiety or depressive episodes.

"Mental health should be always on, where you have a problem now, and you can have immediate help in the moment," Bento said. The approach challenges the traditional therapy model of weekly hour-long sessions, instead offering continuous monitoring and intervention when users need support most.

The M-band tracks physiological markers including heart rate variability, sleep patterns, and environmental factors like lighting conditions. When the AI detects signs of distress, it can recommend immediate interventions such as breathing exercises or physical activity, though all clinical decisions require approval from human therapists.

Sword's timing aligns with a broader recovery in digital health investments. The sector faced significant headwinds post-pandemic as inflation, rising interest rates, and return-to-office mandates dampened investor enthusiasm. Recent public debuts from Omada Health and Hinge Health signal renewed market confidence, though both companies have struggled to maintain their IPO valuations.

The mental health expansion leverages Sword's existing employer and health plan relationships, potentially accelerating adoption. The company already serves major corporations through its physical therapy offerings, providing a built-in distribution channel for Mind.

Bento emphasized that human oversight remains central to the platform's design. While AI handles routine monitoring and basic recommendations, licensed professionals make all clinical decisions and provide traditional talk therapy when needed. This hybrid model addresses regulatory concerns about AI-driven healthcare while maintaining the personalization that drives engagement.

The funding will fuel acquisition opportunities, global expansion, and AI model development. Sword has tested Mind with design partners and existing clients, reporting positive feedback on the platform's personalized approach and convenience factor.

The move positions Sword to compete with established mental health platforms like Headspace Health, Lyra Health, and Spring Health, while differentiating through its AI-first approach and wearable integration. Success will depend on proving clinical efficacy and navigating complex regulatory environments across multiple markets.

For Sword, the expansion represents evolution from a physical therapy specialist to a comprehensive digital health platform. The company's established infrastructure and employer relationships provide advantages, but executing across multiple therapeutic areas will test its operational capabilities and clinical expertise.