Grammarly is set to become a full AI platform, raises $1 billion in non-dilutive funding

Grammarly has raised $1 billion from General Catalyst in non-dilutive financing to broaden its artificial intelligence tools to become a complete productivity platform.

On Thursday, the company said it will channel the new funds into its sales and marketing budgets and make strategic acquisitions of companies or tools that fit its goals.

According to a Reuters report, the company plans to use its AI technology to develop new tools aimed at making everyday communication smoother and more efficient. It also hopes to open its platform to third-party developers. Those apps will be open to Grammarly’s 40 million daily users.

General Catalyst provided the money through its Customer Value Fund, or CVF, which is meant to speed growth in late-stage tech companies. The recent $1 billion boost is one of the largest deals to come out of that fund since it launched.

Instead of taking a share of the company, General Catalyst will earn a capped return based on new revenue that Grammarly generates by using the funding for marketing and sales efforts.

In effect, GC will receive a set percentage of the extra revenue brought in by the added customer growth. This arrangement lets the writing assistant service expand its user base while avoiding the sale of company stock or giving up control over its business direction.

Grammarly is set to become a full AI platform

Grammarly, based in San Francisco, started in 2005 with the goal of helping people write clearly. Over the years, it has grown into a popular writing assistant used by millions for grammar and style suggestions.

Today, the company brings in more than $700 million in revenue each year and is profitable. In December, Grammarly named Shishir Mehrotra as CEO. Mehrotra had led the productivity platform Coda before, and his hire points to the company’s plan to build more workplace tools powered by AI.

“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.

Mehrotra said the company has an eventual goal to go public, although there are no immediate plans for an initial offering. “I’m right now just focused on making sure we’re innovating with new products, growing as fast as we can,” he said. “But when we feel ready, we’ll go public.” He said taking the company public would depend on meeting its goals first.

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