The founder of a homegrown medtech-adjacent startup saw his company acquired this year by another that’s now worth over $2 billion. In going from a “ramen diet”-fueled effort to a multinational company, he has advice for Pittsburgh founders looking to do the same.
In October, SWORD Health acquired Pittsburgh’s Vigilant Technologies after the former raised an $85 million Series C round in June. The multinational company also raised a Series D round last month of $163 million, putting SWORD’s valuation at $2 billion. That also made it one of the fastest growing companies in the musculoskeletal solution industry, increasing its valuation by a factor of 20 over the past year. With the acquisition, SWORD added Vigilant’s haptic feedback shirt collar device for workplace injury prevention to its suite of wellness and preventative technologies related to musculoskeletal health.
SWORD Health doesn’t have an official location in Pittsburgh, but Vigilant founder and former CEO Andy Chan said the members of his team that joined SWORD remain here. (Financial terms of the deal were not disclosed.) Though SWORD has not officially committed to a long-term presence in Pittsburgh yet, Chan shared that discussions around the acquisition acknowledged the potential for innovation here.
“I think we all see the promise” of building in Pittsburgh, Chan said. “At least the intention is to build an engineering hub around the Pittsburgh area sourcing a lot of local talent.”
While neither Vigilant nor SWORD are purely life sciences companies, they operate in an adjacent industry that benefits from the growing expertise and commercial opportunities available in Pittsburgh. Chan, who launched the company in 2015 with fellow Carnegie Mellon University students and an early team that devoted their “blood, sweat and tears” for a small paycheck and a ramen diet, sees a lot more support for not just life sciences-related companies but all startups growing Pittsburgh these days. Though he and his team benefitted from the Project Olympus incubator program through CMU, he said he’s seen more resources become available for non-CMU students as well, including the recent addition of AlphaLab Health to Innovation Works‘ trio of accelerators.
"I've seen the companies that do really well branch out of Pittsburgh, in terms of client development and investor networking."
But even longstanding institutions in the Pittsburgh region like UPMC seem to have become more open to collaborations with young startups. Over his last eight years here, Chan said the increased number of partnerships or feedback channels with the expertise at these larger companies will help give more startups a chance to actually test their products with real customers.
Though SWORD has yet to commit to a Pittsburgh presence, Chan says the potential for growth from a $2 billion company here adds to the trend of unicorns and other highly valued companies already growing here, namely Duolingo and autonomous vehicle companies like Aurora. Stronghold Digital Mining, too, had a hugely successful IPO day, though its share price has since fluctuated. That trend, he said, might be what’s needed to truly solidify tech as a leading economy here.
“The issue that I see in talking to other founders has been that a lot of companies that ended up exiting or becoming successful in one fashion or another, tend to leave the area,” Chan said. “So with that, we always end up with a little bit of a vacuum of a sort where there’s a lot of great talent that incubates here, and then leaves.” (Indeed, Pittsburgh lost the majority of its tech grads over a recent five-year period.)
And while there is a time and place to look beyond Pittsburgh for startup growth, whether that be for funding or early customer testing, Chan argues that it’s worth keeping a footprint here in the long term. Finding that balance is key, he noted from his experience as a founder with a successful exit.
“What I’ve seen trend-wise of companies that have done pretty well locally is that, pulling together resources locally is great, because you get high-quality talent for maybe not quite the cost of New York City” or the like, Chan said. “But at the same time, I think I’ve seen the companies that do really well branch out of Pittsburgh, in terms of client development and investor networking.”
Sophie Burkholder is a 2021-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Heinz Endowments.