Grammarly Secures $1 Billion To Accelerate Its AI Platform

The tech company Grammarly announced on Thursday the closing of a $1 billion investment deal with the venture capital firm General Catalyst. The new investment will be used to develop the company’s AI productivity platform.

According to the press release, Grammarly plans to scale its marketing and sales strategies and expand its customer base. At the moment, Grammarly has approximately 40 million daily users and generates $700 million in annual revenue.

In December, Grammarly announced the acquisition of Coda, a cloud-based productivity platform, marking a transformation from a writing assistant to a complex AI productivity platform. Coda’s former CEO, Shishir Mehrotra, is now Grammarly’s CEO, aligning with the strategic shift.

“Integrating Coda and Grammarly has unlocked tremendous potential for how people work and communicate,” said Mehrotra. “I’m energized by the innovation happening across our teams as Grammarly has become a productivity platform serving everyone from individual students to growing businesses to large enterprises.”

Mehrotra said that, with General Catalyst’s partnership, Grammarly will be able to scale more sustainably and faster, reaching more customers worldwide. The company will combine its businesses’ strategies to deliver broader services beyond its traditional grammar tools.

According to TechCrunch, the new investment is a non-dilutive financial deal, meaning Grammarly will repay it considering a percentage of revenue without giving up equity. This is considered a favorable strategy as it does not affect Grammarly’s valuation—set at $13 billion in 2021, though anonymous sources have mentioned it is significantly lower at present.

The agreement has been made through General Catalyst’s Customer Value Fund (CVF), a capital pool designed to help mature startups—Grammarly is now 16 years old—access growth funding.

According to Reuters, Mehrotra said in an interview that they are considering a public offering, but don’t have any concrete plans at the moment. “I’m right now just focused on making sure we’re innovating with new products, growing as fast as we can. But when we feel ready, we’ll go public,” said the CEO.

General Catalyst recently invested $120 million in the Spanish company Factorial for its expansion in Europe.