On May 29, 2025, Grammarly, a San Francisco-based AI-powered writing assistant, announced a $1 billion non-dilutive financing commitment from General Catalyst’s Customer Value Fund (CVF), one of the fund’s largest investments to date. The 14-year-old company, founded in 2009 by Ukrainian entrepreneurs Max Lytvyn, Alex Shevchenko, and Dmytro Lider, will allocate the funds to scale sales and marketing efforts while redirecting existing capital toward strategic acquisitions and product development. Unlike traditional venture funding, General Catalyst will not receive equity but will earn a capped return based on a percentage of revenue generated from customer acquisition initiatives funded by the investment. At the current exchange rate of N1,579/$1 as of May 30, 2025, the $1 billion equates to approximately N1.58 trillion, underscoring the deal’s magnitude.
The financing supports Grammarly’s transformation into a comprehensive AI productivity platform, building on its acquisition of Coda in December 2024, with Coda’s CEO Shishir Mehrotra now leading Grammarly. With over 40 million daily users and annual revenue exceeding $700 million, Grammarly aims to develop communication-based productivity tools and host third-party applications, leveraging its extensive user base. CEO Mehrotra emphasized the strategic importance of this capital in driving innovation and growth, stating, “As Grammarly evolves from a single-purpose agent to an agent platform, it’s critical to bet big on product development, M&A, and growth strategies.” The company, profitable and valued at $13 billion in 2021, benefits from this non-dilutive structure, avoiding a valuation reset in a tougher market environment.
General Catalyst’s CVF, which has backed nearly 50 companies like Lemonade and Fivetran, provides capital secured by recurring revenue, enabling late-stage startups to grow without equity dilution. Pranav Singhvi, CVF’s Managing Director, noted, “Companies like Grammarly can invest in sales and marketing with consistent returns, and this AI wave gives them firepower to expand beyond 40 million users.” Posts on X, such as from @TechCrunch and @generalcatalyst, reflect enthusiasm for the deal, highlighting its role in accelerating Grammarly’s AI-driven growth. While Mehrotra has expressed long-term interest in an IPO, he told Reuters there are no immediate plans, focusing instead on innovation and market expansion.
