Grammarly Secures $1 Billion Funding to Expand AI Productivity Platform

Grammarly announced on May 29th that it had secured a $1 billion non-dilutive growth financing package from General Catalyst’s Customer Value Fund (CVF). The deal is structured as revenue-based financing, meaning General Catalyst will receive a capped return tied to Grammarly’s revenue growth without taking additional equity. This leaves Grammarly’s 2021 valuation of $13 billion unchanged.

Key Highlights of the Deal

• Profitable Growth: Grammarly’s annual revenue is now "well above $700 million," ensuring the revenue share can be serviced without hindering growth.

• Funding Allocation: The capital will be directed into three areas:

  1. Product Development: Expanding from a writing assistant to a broader AI-productivity platform.
  2. Strategic M&A: Acquiring complementary technologies or companies.
  3. Sales and Marketing: Reaching more of its 40 million daily users.

• General Catalyst’s Role: GC led Grammarly’s first outside investment in 2017 and has continued to support the company. This deal deepens its involvement without diluting existing shareholders.

Grammarly’s Journey to a $13 Billion Valuation

Ukrainian Roots and Bootstrapping (2009-2016)

Founded in Kyiv in 2009 by Max Lytvyn, Alex Shevchenko, and Dmytro Lider, Grammarly started as a subscription grammar-checker for academics. It pivoted to a freemium model, gaining over 1 million daily users by 2015.

First Institutional Capital (2017-2018)

In 2017, Grammarly raised $110 million led by General Catalyst, IVP, and Spark Capital. The funds were used to develop a mobile keyboard and expand into enterprise accounts.

Enterprise Push (2019)

A $90 million round in 2019 funded the launch of Grammarly Business, shifting focus to a SaaS communication suite.

Unicorn-Plus Round (2021)

In 2021, Grammarly raised $200 million from Baillie Gifford and BlackRock, reaching a $13 billion valuation.