Grammarly Secures $1B in Non-Dilutive Funding
AI Writing Assistant Secures Major Growth Capital
Grammarly has obtained a $1 billion financing commitment from venture capital firm General Catalyst through a non-traditional funding arrangement. The 14-year-old AI-powered writing assistant will direct these funds toward expanding its sales and marketing operations while preserving existing capital for strategic acquisitions.
How the Alternative Financing Works
Unlike conventional venture capital investments, this arrangement through General Catalyst’s Customer Value Fund (CVF) won’t require Grammarly to give up equity. Instead, the company will repay:
- The principal amount
- A fixed, capped percentage of revenue generated from the invested funds
Strategic Advantages of Non-Dilutive Funding
This financing model offers Grammarly several key benefits:
- Protects existing shareholder equity
- Maintains the company’s valuation (previously $13B in 2021)
- Provides working capital without resetting valuation expectations
Grammarly’s Evolving AI Strategy
The funding comes as Grammarly transforms into a comprehensive AI productivity platform, evidenced by:
- Its December acquisition of productivity startup Coda
- Appointment of Coda CEO Shishir Mehrotra as Grammarly’s new leader
- Current annual revenue exceeding $700 million
About General Catalyst’s CVF
The Customer Value Fund has provided similar financing to nearly 50 growth-stage companies, including:
- Insurtech leader Lemonade
- Telehealth platform Ro
This investment vehicle operates independently from General Catalyst’s main funds, maintaining separate limited partners and investment strategies.
This major financing round positions Grammarly to aggressively expand its AI-powered productivity suite while maintaining financial flexibility in a changing market landscape. The non-dilutive nature of the funding preserves shareholder value while providing significant resources for growth initiatives.