Grammarly Gets $1 Billion to Boost AI, Expand Platform

So, get this! Grammarly, you know, that writing helper thingy, just got a TON of money. Like, a cool billion bucks! It's not like they sold part of their company or anything. This cash is from a company called General Catalyst, and it's all so Grammarly can get even better with AI stuff and become like, this super helpful tool for getting work done.

Grammarly is already pretty famous for helping us write better. Now, they want to use this money to pay for things like getting the word out more and maybe even buying other companies. They're really trying to use AI to build more tools to help people talk and work together better. Plus, they already have a ton of users, like 40 million every day! They plan to let other companies put their tools on the Grammarly platform so those companies can reach all those users.

General Catalyst gave Grammarly this big chunk of money through one of their special funds. This is a pretty big deal for companies like Grammarly that are already doing well. It helps them grow even faster by giving them specific money to find new customers. Think of it like this: usually, companies use money from their regular sales for stuff like marketing. But now Grammarly has this extra money, so they can use their regular cash to make their product even cooler.

Now, you might be wondering what's in it for General Catalyst. Well, they don't get any ownership in Grammarly with this deal. Instead, they'll get some money back based on how much revenue Grammarly makes from using this new cash to get customers. It's kind of like they get a small percentage of the money Grammarly makes from the new customers they get with this funding.

Grammarly actually started way back in 2009. They're doing pretty well, making over $700 million a year and are profitable, which is awesome. They even got a new boss in December, Shishir Mehrotra. He used to run another company that helped people work together. This hiring kind of shows that Grammarly is serious about getting into more AI tools for work.

Shishir said in an interview that Grammarly is changing a lot. It's going from being just a writing helper to being a platform where you can do a bunch of things. He said it felt really important to invest heavily in making the product better, maybe buying other companies, and growing the business. He also mentioned that they eventually want to go public, like selling shares on the stock market, but they're not quite ready yet. Right now, he's just focused on making new things and growing as fast as possible. But yeah, when they're ready, they'll go public.

This big investment for growth could be good for everyone involved, especially if it works out. It could make Grammarly worth more, and General Catalyst might benefit too because they invested in Grammarly before, way back in 2017.

Grammarly is based in San Francisco and has raised a lot of money from investors over time, over $550 million! The last time they were valued in 2021, they were worth a whopping $13 billion. General Catalyst's special fund that gave Grammarly the money is different from their regular investment funds. It's even separate from the new $8 billion they just raised.

This is part of a bigger plan for General Catalyst. Their CEO, Hemant Taneja, wants the company to do more than just the usual investing stuff. They're trying out new ways to fund companies, like this one focusing on getting customers. This customer acquisition fund has already invested in almost 50 companies, like Lemonade and Fivetran. They're basically helping companies grow in a way that's more predictable for getting returns.

Pranav Singhvi, who works at General Catalyst, said that companies like Grammarly are good because they know they can put money into sales and marketing and get a pretty steady return. With all the new AI stuff happening, giving Grammarly this money could help them get even MORE customers, beyond the 40 million they already have. Pretty cool, right?