Grammarly has secured $1 billion in non-dilutive funding from General Catalyst to enhance its artificial intelligence (AI) capabilities, with the goal of evolving into a full-fledged productivity platform, the companies announced on Thursday.
Widely recognized for its writing assistant tool, Grammarly intends to use the funding to support its sales and marketing efforts, as well as pursue strategic acquisitions. The company plans to develop additional AI-driven communication and productivity tools and may also integrate third-party tools into its platform, leveraging its base of 40 million daily active users.
The investment marks one of the largest deployments from General Catalyst’s Customer Value Fund (CVF), designed to help late-stage tech firms like Grammarly accelerate growth through targeted customer acquisition. By freeing up capital usually spent on sales and marketing, Grammarly can redirect resources toward advancing its product development.
Unlike traditional equity investments, General Catalyst will not take ownership in Grammarly. Instead, it will receive a capped return based on a percentage of the revenue generated from customer acquisition efforts funded by the investment.
Founded in 2009, Grammarly generates over $700 million in annual revenue and remains profitable. The company’s recent appointment of Shishir Mehrotra—former CEO of productivity platform Coda—as its new chief executive officer underscores its ambitions to expand into a broader suite of AI-powered workplace tools.
“As Grammarly is going through a huge transformation of going from being what is mostly known as a single-purpose agent to being an agent platform, it just felt very important for us to be able to bet big in our product development and in M&A as well as in our growth strategies,” Mehrotra said in an interview.
He added that the company has an eventual goal to go public, although no imminent plans.
“I’m right now just focused on making sure we’re innovating with new products and growing as fast as we can. But when we feel ready, we’ll go public,” Mehrotra added.
If successful, this dedicated growth investment could also enhance Grammarly’s overall valuation—and indirectly benefit General Catalyst’s existing equity stake from its participation in Grammarly’s Series B round in 2017.
Based in San Francisco, Grammarly has raised more than $550 million in venture capital funding, according to PitchBook. Investors last valued the company at $13 billion in 2021.
A separate group of limited partners backs General Catalyst’s Customer Value Fund (CVF), which operates independently from the firm’s primary venture funds. The firm did not include CVF in its recently announced $8 billion capital raise.
This model reflects a broader strategic shift under CEO Hemant Taneja, as General Catalyst moves beyond the traditional venture capital framework by introducing innovative funding structures. The CVF focuses on growth-stage investments tied directly to customer acquisition performance, offering a more predictable return path.
To date, the Customer Value Fund has backed nearly 50 companies, including notable names like Lemonade and Fivetran, aligning its investments closely with measurable growth outcomes.
“Companies like Grammarly basically have a machine where they can invest dollars in sales and marketing and generate a very consistent return,” said Pranav Singhvi, Managing Director at General Catalyst. “With this wave of AI, giving Grammarly the firepower to actually go and invest could land those customers beyond the 40 million.”
Grammarly’s $1 billion non-dilutive financing from General Catalyst marks a pivotal moment in its evolution from a writing assistant into a comprehensive AI-powered productivity platform. This strategic partnership allows Grammarly to scale customer acquisition and invest more heavily in product innovation without giving up equity.
