Grammarly, the world’s leading AI-powered writing assistant, has raised $1 billion in non-dilutive financing from General Catalyst, marking a major step in its transformation into a full-fledged AI productivity platform
Grammarly’s $1B Growth Investment Aims to Expand AI Tools and Customer Base
Announced Thursday, this strategic investment will allow Grammarly to scale its sales and marketing operations, fund acquisitions, and build an AI-powered communication productivity suite without giving up equity. The non-dilutive financing structure ensures General Catalyst receives a return linked to Grammarly’s revenue from the capital used, not an ownership stake.
This is one of the largest investments made through General Catalyst’s Customer Value Fund (CVF), a specialised fund focused on helping late-stage tech firms accelerate customer acquisition and long-term growth.
Leveraging 40 million Daily Users for Platform Expansion
With 40 million daily active users, Grammarly plans to open its platform to third-party tools, effectively transforming into a communication hub for the modern workplace. The company will reallocate capital typically spent on customer acquisition to focus on product innovation and strategic mergers and acquisitions.
“We’re transforming from a single-purpose agent to an agent platform. It felt very important to bet big on product development, M&A, and our growth strategies.” Shishir Mehrotra, Grammarly CEO
Grammarly Signals IPO Ambitions, But No Imminent Plans
CEO Shishir Mehrotra, former CEO of Coda, took the helm in December 2024 to lead Grammarly into the next phase of its AI evolution. While an IPO remains a long-term goal, Mehrotra emphasises that current priorities are focused on innovation and accelerated growth. “We’re innovating, growing as fast as we can. When we feel ready, we’ll go public,” he said in an interview.
Grammarly’s Financials: $700M+ Annual Revenue and Profitability
Founded in 2009, Grammarly has grown into a profitable company with over $700 million in annual revenue. The company has raised over $550 million in venture capital to date, with its last known valuation of $13 billion in 2021. General Catalyst was also an equity investor in Grammarly’s Series B round in 2017.
General Catalyst’s Evolving Strategy: Beyond Traditional Venture Capital
The Customer Value Fund, separated from General Catalyst’s main $8 billion venture fund, is a key part of the firm’s strategy under CEO Hemant Taneja to redefine venture capital with innovative funding models. It has previously supported companies like Lemonade and Fivetran using similar structures focused on predictable, metric-driven growth. “Grammarly has a machine where dollars invested in sales and marketing generate consistent returns.” — Pranav Singhvi, Managing Director, General Catalyst
