Grammarly raises $1 billion from General Catalyst to expand AI platform and accelerate growth toward IPO

Grammarly just landed a massive $1 billion in non-dilutive financing from General Catalyst. The deal gives the writing assistant company fresh firepower to grow its AI offerings, expand into new products, and ramp up marketing—all without giving up equity.

The investment, announced Thursday, is structured through General Catalyst’s Customer Value Fund. That means Grammarly won’t give up shares, but instead will repay a portion of the revenue generated from the capital used to acquire new customers.

“Grammarly will use the go-to-market investment from General Catalyst’s Customer Value Fund (CVF) to scale sales and marketing and for strategic acquisitions,” the startup said in a blog post.

It’s one of the largest moves yet from the CVF, which is set up to help later-stage companies scale without resorting to traditional fundraising. For Grammarly, the money could accelerate everything from product development to strategic acquisitions. With over 40 million daily users, the company sees a path to evolve from a single-use writing assistant into a broader productivity platform—one that might even host third-party tools.

“We’re going through a huge transformation—from being a single-purpose agent to becoming an agent platform,” said Grammarly CEO Shishir Mehrotra in an interview. “It just felt very important for us to bet big on product development, M&A, and growth strategies.”

Mehrotra, who joined as CEO in December after leading productivity platform Coda, is steering Grammarly into its next phase. While there are no immediate IPO plans, he made it clear the company has public markets on its radar.

“I’m right now just focused on making sure we’re innovating with new products, growing as fast as we can. But when we feel ready, we’ll go public,” he said.

Founded in 2009, Grammarly is already profitable and generates over $700 million in annual revenue. The company has raised more than $550 million in venture capital and was last valued at $13 billion in 2021, according to PitchBook.

For General Catalyst, this approach marks a shift in how it backs growth-stage companies. Instead of traditional VC returns tied to equity, CVF investments focus on revenue outcomes—essentially giving proven companies like Grammarly a chance to scale faster without shareholder dilution.

“Companies like Grammarly basically have a machine where they can invest dollars in sales and marketing and generate a very consistent return,” said Pranav Singhvi, Managing Director at General Catalyst. “With this wave of AI, giving Grammarly the firepower to actually go and invest could land those customers beyond the 40 million.”

The CVF has already backed nearly 50 companies, including Lemonade and Fivetran. It operates separately from General Catalyst’s main funds, which recently raised $8 billion.

This kind of structure could become more common as late-stage companies look for non-traditional ways to grow, especially in a market where IPO windows are tight and equity dilution is tough to swallow. For Grammarly, it’s a $1 billion vote of confidence and a push to move faster into the AI future it’s building.