Grammarly Gets $1 Billion Boost for AI Expansion

Grammarly Gets $1 Billion Boost for AI Expansion

Hey, so check this out! Grammarly, you know, the awesome writing helper, just got a HUGE boost. They snagged a cool billion dollars from General Catalyst without giving away any ownership, which is pretty neat. They wanna use this money to beef up their AI stuff and basically become more than just a writing tool. Think of it like a super-powered help center for getting things done, you know?

Grammarly is already pretty popular, helping like 40 million people every day. They plan to use this big chunk of cash to pay for sales and marketing and maybe even buy up some other companies. Their goal is to build more cool tools that help with communication using AI, and they even want to let other companies plug into their platform since they have so many users. This investment is one of the biggest General Catalyst has ever done from this one special fund they have.

This kind of deal is pretty cool for companies like Grammarly that are already doing well but wanna grow even faster. Instead of using their own money that they need for other things, they can use this dedicated fund to go after new customers. And guess what? General Catalyst doesn't get a piece of Grammarly itself from this deal. Instead, they'll get some money back based on how much extra cash Grammarly makes from using this funding to get new users. It's like a percentage of that new money they bring in.

Grammarly has actually been around since 2009, and get this, they make over $700 million a year and they're making money! Back in December, they got a new big boss, Shishir Mehrotra, who used to run a company called Coda that helps people be more productive. This totally signals that Grammarly is serious about getting into the whole AI-powered work tool game.

Shishir even said in an interview that Grammarly is changing a lot, going from just being known for one thing to being a platform for lots of things. He felt it was super important to really invest big in making their product better, maybe buying other companies too, and just growing as much as possible. He also mentioned that they eventually want to go public, but they're not rushing it. He's just focused on making sure they're creating new stuff and growing fast right now. When they feel like they're ready, they'll make that move, you know?

If this investment works out like they hope, it could also make Grammarly worth more money, which is good for General Catalyst too since they invested in Grammarly back in 2017. Grammarly is based in San Francisco and has raised a bunch of money from other investors over the years, more than $550 million! Last time they were valued, in 2021, they were worth a whopping $13 billion.

General Catalyst has this special fund, the Customer Value Fund, that's separate from their usual funds. It's not part of that big $8 billion they just announced raising. This is part of how General Catalyst is trying to do things differently and not just be a regular old investor. They're trying out new ways to fund companies, like this customer acquisition stuff. This customer fund has already put money into almost 50 companies, like Lemonade and Fivetran. They're really looking at how companies can grow in a more predictable way to get their money back.

One of the guys at General Catalyst, Pranav Singhvi, said that companies like Grammarly are kinda like a machine where they can put money into sales and marketing and get a really steady return. He thinks with all the new AI stuff happening, giving Grammarly this financial power could help them get way more customers, maybe even beyond those 40 million they already have. Pretty wild, right?