Grammarly Gets $1 Billion Boost to Grow AI Offerings
So get this, Grammarly, you know, the writing helper? They just got a massive one billion bucks from General Catalyst. Like, whoa! They wanna use it to get even bigger, going from just helping you write to like, a whole work buddy thing, using AI and stuff.
Seems they are planning to use that huge chunk of change for things like getting the word out, sales, and maybe even buying other companies. They want to build more cool tools with AI to help people talk better at work, and they even wanna have other companies' tools on their platform. They've got tons of people using them already, like 40 million folks every day!
This investment is a pretty big deal for General Catalyst too, it's one of their largest from this one fund they have. It could totally help companies like Grammarly grow faster by giving them specific money just for getting new customers. Instead of using up their regular money on sales and marketing, Grammarly can put more into making their product even better. General Catalyst doesn't get ownership in Grammarly for this, but they get a portion of the money Grammarly makes from using this cash to get new users. Pretty neat, right?
Grammarly's been around since 2009, and they're actually making money, over $700 million a year! And guess what? They just got a new boss back in December, this guy Shishir Mehrotra who used to run another work tool company. This kinda shows they're serious about becoming a bigger deal in the AI work tool space.
The new CEO said in an interview that they're changing a LOT at Grammarly. They want to go from being known for just one main thing to having a whole bunch of stuff on their platform. He said it felt super important to really go for it with developing new stuff, maybe buying other companies, and growing like crazy. He also mentioned they wanna go public eventually, but no rush right now. He's just focused on making cool new products and growing as fast as possible, and then they'll think about the whole public thing when they're ready.
This big investment, if it works out, could also boost Grammarly's value and General Catalyst's stake in the company, since General Catalyst also invested in Grammarly way back in 2017. Grammarly's based in San Francisco and has raised over $550 million from investors over time. The last time they were valued was in 2021, and they were worth like, $13 billion!
General Catalyst's fund for getting customers is totally separate from their main investment funds, with different money partners. This fund isn't part of the new 8 billion dollars they just announced raising either. This is part of how General Catalyst is trying new things and going beyond just the usual way of investing, trying out new ways to fund companies. Their customer getting fund has put money into almost 50 companies already, and they focus on how well a company gets new customers as a way to predict future returns.
One of the big bosses at General Catalyst said that companies like Grammarly are basically like a machine where they put money into sales and marketing and get very consistent results. He thinks with all this new AI stuff, giving Grammarly this extra money could help them get even more customers beyond the 40 million they already have. Pretty exciting to see what they do!
