ISLAMABAD: Grammarly has secured a staggering $1 billion in non-dilutive financing from General Catalyst to supercharge its transformation into a comprehensive AI-driven productivity platform.
Known for its widely used writing assistant, Grammarly is now aiming to broaden its influence by incorporating new communication tools, productivity features, and even third-party integrations into its platform.
The deal marks one of the largest investments ever made through General Catalyst’s Customer Value Fund (CVF). What sets this funding apart is its structure: General Catalyst will not receive equity in Grammarly. Instead, the firm will get a capped return based on revenue generated from this capital when used for customer acquisition efforts.
This move enables Grammarly to reallocate traditional sales and marketing funds toward accelerating its product innovation and making strategic acquisitions.
Grammarly’s Expansion Beyond a Writing Assistant
Founded in 2005, Grammarly has grown to over 40 million daily users and boasts an annual revenue exceeding $700 million.
The company has been profitable and recently took a major step by appointing Shishir Mehrotra, former CEO of productivity platform Coda, as its new leader. This leadership change is viewed as a clear signal of Grammarly’s pivot toward becoming a full-scale AI-powered productivity ecosystem.
Mehrotra emphasized that the funding allows Grammarly to “bet big” on product development and mergers and acquisitions, noting that the company is shifting from being a single-use writing tool to a broad agent-based productivity platform.
He hinted at potential plans for going public, although nothing is currently in motion. “Right now, we’re focused on innovating and growing fast,” he said.
A Strategic Bet on AI and Scalable Growth
General Catalyst’s investment strategy here reflects a shift in venture capital toward performance-driven returns. With nearly 50 other investments made through the Customer Value Fund, including in firms like Lemonade and Fivetran, the focus is now on businesses with proven customer acquisition engines. According to General Catalyst MD Pranav Singhvi, Grammarly’s scalable model and strong user base make it ideal for rapid AI-driven expansion.
San Francisco-based Grammarly, last valued at $13 billion in 2021, has now raised over $550 million in venture funding prior to this deal. With this fresh injection of capital, the company appears well-positioned to redefine how AI is used in workplace communication and productivity.
