Grammarly, the well-known American AI-powered writing assistant, has secured a significant $1 billion investment from General Catalyst, one of the leading venture capital firms in the U.S. In a rare move in the startup world, this massive funding comes with no equity dilution, allowing Grammarly to maintain its existing ownership structure and valuation.
According to official sources, this non-traditional investment comes from General Catalyst’s Customer Value Fund (CVF) — a fund that targets mature startups with solid revenue streams and high growth potential. Grammarly will utilize this fund primarily for sales and marketing expansion, aiming to scale up its user base and revenue in the highly competitive AI and productivity software space.
Unlike typical venture capital models, General Catalyst will not acquire any ownership in Grammarly. Instead, Grammarly has agreed to repay the capital along with a share of the revenue generated through the fund’s deployment. This strategic funding structure ensures Grammarly’s valuation remains intact, protecting its existing shareholders from dilution.
It’s worth noting that Grammarly was valued at $13 billion in 2021, but reports suggest the valuation has since dipped. However, the company remains a robust player in the AI writing sector. Following its acquisition of Coda in December 2024, Grammarly reported annual revenues exceeding $700 million, indicating strong business fundamentals and consistent growth.
This fresh capital injection positions Grammarly to pursue aggressive market expansion, potentially including more strategic acquisitions, while further strengthening its AI capabilities and global presence.
For more updates on Grammarly’s AI innovations and funding milestones, stay tuned to PassionateGeekz.
