Grammarly has secured a $1 billion commitment from General Catalyst to enhance its sales and marketing efforts, allowing the company to allocate existing capital for strategic acquisitions.
Unlike traditional funding rounds, General Catalyst will not take an equity stake in Grammarly. Instead, the company will repay the investment with a fixed, capped percentage of the revenue generated from these funds.
ICYMT: Littler prioritizes playoffs, ignores retirement speculation
This investment is part of General Catalyst’s Customer Value Fund (CVF), designed to support late-stage startups with stable revenue streams. The CVF’s approach essentially provides capital secured by a company’s recurring revenue.
This nondilutive financing is particularly beneficial for Grammarly, as it avoids resetting the company’s valuation. Grammarly was valued at $13 billion in 2021 but is reportedly worth less today, according to an anonymous investor.
Grammarly did not respond to requests for comment.
In December, the company acquired productivity startup Coda and appointed its CEO, Shishir Mehrotra, to lead its evolution into an AI productivity tool, with annual revenues exceeding $700 million.
General Catalyst’s CVF has funded nearly 50 companies, including insurtech Lemonade and telehealth platform Ro. The fund operates with distinct limited partners and was not part of the recent $8 billion capital raise by General Catalyst.
SOURCE: TECH CRUNCH
