Grammarly has secured $1 billion in funding from General Catalyst. The San Francisco-based company wants to transform itself from an AI writing tool into a broader communication and productivity platform. The investment demonstrates confidence in Grammarly’s AI expertise and language skills.
The funding comes from General Catalyst’s Customer Value Fund, which is known for investing in companies with predictable revenue streams. It is a non-dilutive investment, meaning that Grammarly does not have to give up any equity for the funding. This is the largest investment the company has ever received.
Confidence in a proven concept
This is not the first time General Catalyst has invested in Grammarly. In 2017, the venture capitalist led a $90 million investment round. The current $1 billion investment is significantly more, but Grammarly’s financial picture and steady monthly revenue show a solid foundation. This financing will undoubtedly not hurt General Catalyst in the long run.
Grammarly has approximately 30 to 40 million daily users, and more than 50,000 teams use Grammarly Business worldwide. That’s a lot of people and subscriptions.
From writing assistant to platform
Since its founding in 2009, Grammarly has grown from a grammar-checking tool to an AI productivity tool for all aspects of writing. The company competes with tools such as Linguix and Writer. With the new funding, Grammarly wants to build more communication-based tools and host external tools on its platform.
Grammarly now wants to utilize the foundation it has built to expand the platform to include more tools. Given their strengths in language and AI, this could lead to some great applications. The ultimate goal is to transition from writing assistant to communication platform.
AI is hot
With an investment of $1 billion, Grammarly certainly has the financial resources to expand further. AI is a hot topic at the moment, which means that organizations are investing heavily in it. Salesforce bought Informatica for $8 billion solely to strengthen its AI portfolio. Oracle is investing $40 billion in Nvidia GB200 superchips so that it can provide computing power to OpenAI.