Grammarly Secures $1B in Nondilutive Funding From General Catalyst
AI Writing Assistant Lands Major Growth Funding
The writing assistance platform Grammarly has secured a massive $1 billion commitment from venture capital firm General Catalyst. The 14-year-old company plans to use this capital injection to boost its sales and marketing efforts while freeing up existing funds for strategic acquisitions.
Alternative Financing Structure
Unlike traditional venture capital investments, this deal doesn’t involve equity. General Catalyst won’t receive company shares in exchange for the funds. Instead, Grammarly will repay the capital along with a fixed, capped percentage of revenue generated from using these funds.
This financing comes from General Catalyst’s Customer Value Fund (CVF), a specialized capital pool designed for mature startups with predictable revenue streams. The CVF model essentially provides revenue-backed loans to help companies scale without dilution.
Why Nondilutive Funding Matters
The funding strategy offers significant advantages for Grammarly:
- Preserves current valuation (Grammarly was last valued at $13 billion in 2021)
- No need to reprice shares in today’s tougher market conditions
- Maintains full control for existing shareholders
An anonymous investor confirmed Grammarly’s current valuation is substantially lower than its 2021 peak during the zero-interest-rate era.
Grammarly’s AI-Powered Growth
The company recently acquired productivity startup Coda and appointed its CEO Shishir Mehrotra to lead Grammarly’s transformation into an AI productivity platform. With reported annual revenue exceeding $700 million, Grammarly continues expanding beyond its core writing assistance features.
About the Customer Value Fund
General Catalyst’s CVF has funded nearly 50 companies including:
- Insurtech leader Lemonade
- Telehealth platform Ro
The fund operates with its own LP structure and wasn’t part of General Catalyst’s recent $8 billion capital raise. Firm leaders Hemant Taneja and Pranav Singhvi previously discussed this innovative financing model in detail during a TechCrunch interview.