Grammarly Secures $1B Non-Dilutive Funding from General Catalyst

Grammarly Raises $1 Billion in Non-Dilutive Funding

AI-powered writing assistant Grammarly has secured $1 billion in non-dilutive funding from General Catalyst's Customer Value Fund (CVF). This significant investment will support Grammarly's sales and marketing initiatives, allowing the company to use existing capital for strategic acquisitions.

Non-Dilutive Funding Supports Growth

Unlike traditional venture capital, this non-dilutive funding model means General Catalyst won't receive equity in Grammarly. Instead, Grammarly will repay the capital along with a capped percentage of revenue generated from the investment. This approach benefits Grammarly by preserving its valuation and avoiding dilution.

This financing model is particularly attractive in the current market, where valuations are under pressure. Grammarly's previous valuation of $13 billion in 2021 is reportedly lower in today's market, according to an anonymous investor.

Funding Follows Recent Acquisition

This funding follows Grammarly's December acquisition of productivity startup Coda and the appointment of Coda's CEO, Shishir Mehrotra, to lead Grammarly. The company is transitioning into a broader AI productivity platform and boasts annual revenue exceeding $700 million.

General Catalyst's Customer Value Fund

General Catalyst's CVF provides funding to late-stage startups with predictable revenue streams. The fund operates independently from General Catalyst's other investments and has supported nearly 50 companies, including Lemonade and Ro. CVF's strategy focuses on providing capital secured by a company's recurring revenue.

More details about General Catalyst's specialized financing strategy can be found in their discussion with TechCrunch last fall.