Grammarly Raises $1B from General Catalyst for AI Growth - InforCapital

Unlike traditional equity financing, this deal allows Grammarly to retain full ownership. Instead of giving up equity, the company will repay the investment through a capped percentage of revenue generated from the capital's use in customer acquisition efforts.

Shishir Mehrotra, who became CEO following Grammarly's acquisition of productivity platform Coda in December 2024, emphasized the significance of this funding. "We're undergoing a significant transformation—from a single-purpose agent to an agent platform," Mehrotra stated. "This investment enables us to bet big on product development, mergers and acquisitions, and growth strategies."

Grammarly plans to utilize the funds to scale its sales and marketing operations and pursue strategic acquisitions. With over 40 million daily users and annual revenues exceeding $700 million, the company is poised to integrate more communication-based productivity tools and host third-party applications on its platform.

General Catalyst's CVF, designed to support late-stage startups with predictable revenue streams, has previously backed nearly 50 companies, including Lemonade and Fivetran. This investment aligns with General Catalyst's strategy to provide growth capital without diluting ownership or resetting company valuations.

Founded in 2009, Grammarly has raised over $550 million in venture capital and was last valued at $13 billion in 2021. While there are aspirations to go public, Mehrotra indicated that there are no immediate plans for an IPO, focusing instead on innovation and rapid growth.