TLDR;
- Grammarly has secured $1 billion in non-dilutive funding from General Catalyst.
- The funds will accelerate AI product development, acquisitions, and customer growth.
- No equity was exchanged; General Catalyst’s return is tied to Grammarly’s revenue.
- Grammarly eyes an eventual IPO as it evolves into an enterprise AI platform.
Grammarly, the popular AI-powered writing assistant, has landed a monumental $1 billion in non-dilutive financing from venture capital firm General Catalyst.
Announced on Thursday, the funding marks one of the largest single investments in the productivity AI space, underscoring Grammarly’s ambitions to evolve from a grammar checker into a full-fledged enterprise productivity platform.
Unlike traditional funding rounds, this deal does not dilute Grammarly’s ownership. Instead, General Catalyst will earn a capped return based on the revenue generated from the funds deployed, primarily in customer acquisition, product development, and strategic growth efforts.
Writing Tool to AI Productivity
Founded in 2009, Grammarly now boasts over 40 million daily active users and generates more than $700 million in annual revenue. Initially known for improving writing through grammar and tone suggestions, the company has steadily expanded its offerings. Its tools are now integrated across over half a million applications and websites, enhancing communication for individuals and businesses alike.
With the acquisition of productivity platform Coda in December, Grammarly signaled a broader shift. Coda’s collaborative document tools and “Coda Brain” AI chatbot are now being integrated into Grammarly’s ecosystem, positioning it to compete with productivity suites like Google Workspace and Microsoft 365.
“Integrating Coda and Grammarly has unlocked tremendous potential for how people work and communicate,” said CEO Shishir Mehrotra, who previously led Coda. “We are building something far bigger than a writing tool—we are becoming the productivity platform of the future.”
Strategic Use of Capital
Notably, the fresh $1 billion injection will allow Grammarly to invest aggressively in product innovation and strategic acquisitions. By freeing up capital normally used for sales and marketing, the company can reallocate resources toward deeper AI integrations and enterprise tools.
“This funding lets us think bigger, move faster, and serve more users with transformative AI experiences,” Mehrotra noted. “Our focus is on creating value now and building for the long term.”
General Catalyst’s approach through its Customer Value Fund (CVF) aligns with this growth strategy. Rather than taking equity, the firm’s return is tied directly to Grammarly’s revenue generated from the fund’s usage. This investment model is designed to support mature tech companies with predictable growth engines, Grammarly being a prime example.
IPO on the Horizon
While the funding puts Grammarly in a strong position to scale, the company is not rushing toward a public offering.
“We definitely see an IPO as part of our long-term vision,” Mehrotra said. “But right now, the priority is innovation and growth. We’ll go public when the time is right.”
General Catalyst, which first invested in Grammarly’s Series B in 2017, remains a key backer. CEO Hemant Taneja emphasized that the firm has long believed in Grammarly’s potential to lead in applied AI and sees this extended partnership as a catalyst for even greater enterprise adoption.
“Grammarly has built a machine where every dollar invested in growth generates a consistent return,” added General Catalyst Managing Director Pranav Singhvi. “This funding gives them the firepower to go well beyond their current 40 million daily users.”
