Grammarly Gets $1 Billion Boost for AI - What's Next?
So, get this! Grammarly, you know, the writing help thingy? They just got a HUGE chunk of change, like a billion dollars, from some folks called General Catalyst. It's not like they're giving up any ownership though, which is kinda cool. They wanna use this money to get even better with their AI stuff and become this all-in-one spot for getting work done. They spilled the beans about it on Thursday.
Grammarly's already pretty famous for that writing assistant tool, but they're planning to use this cash for sales and marketing, and maybe even buy other companies. They're serious about using AI to build more tools that help us talk better at work. Plus, they have like 40 million people using their thing every day, so they're gonna let other tools hang out on their platform too. It's like a big productivity party!
This investment is one of the biggest from General Catalyst's weirdly named 'Customer Value Fund'. It could really help companies like Grammarly, who are already pretty far along, grow even faster by giving them special money just for getting new customers. By doing this, Grammarly can take the money they'd normally spend on sales and marketing and put it into making their products even better. General Catalyst doesn't get a piece of Grammarly because of this though. Instead, they get a cut of the money Grammarly makes from getting new customers with this fund, up to a certain amount. It's a little complicated, tbh.
Grammarly started way back in 2009 and they make over $700 million a year, and get this, they're actually making money! Also, in December, a guy who used to run another productivity company called Coda, Shishir Mehrotra, took over as the boss at Grammarly. This totally shows they're trying to do more with AI for the workplace.
Shishir said in an interview that Grammarly is changing from being known for just one thing to being like a whole platform with lots of tools. He said it was super important for them to be able to go big on making their products better, buying other companies, and growing. He also mentioned that they want to go public eventually, but there's no rush right now. He's just focused on making cool new products and growing as fast as possible. He figures they'll go public when they feel totally ready.
This special investment, if it really works out, could make Grammarly's value go up, and even help out General Catalyst since they already put money into Grammarly back in 2017. Grammarly is based in San Francisco and they've gotten over $550 million from investors over time, according to this place called PitchBook. The last time anyone checked, in 2021, they were worth a crazy $13 billion!
General Catalyst's 'Customer Value Fund' is separate from their regular investing money and has different people who put money into it. It's not part of that big $8 billion fund they just announced. This is part of a new plan for General Catalyst, led by the boss, Hemant Taneja. They're trying to do more than just the usual investing stuff, like coming up with new ways to give companies money. Their customer getting fund has invested in almost 50 companies, including names like Lemonade and Fivetran, and they're focusing on growth to make their returns more predictable.
Pranav Singhvi, one of the main folks at General Catalyst, said that companies like Grammarly are basically like machines where they can put money into sales and marketing and get a really steady return. He thinks with all this AI stuff happening, giving Grammarly the ability to invest could get them even more customers beyond the 40 million they already have. Pretty cool, huh?
