AI writing and productivity assistant Grammarly has secured $1 billion in funding from longtime investor General Catalyst, the company announced on Thursday.
San Francisco-based Grammarly says it has more than 40 million users and annual revenue of more than $700 million.
The raise follows the company’s acquisition of Coda in January, with Coda’s CEO taking over leadership of the combined company. That acquisition helped Grammarly evolve from an AI-powered writing assistant to a productivity platform for apps and agents.
The investment was made through General Catalyst’s Customer Value Fund, and is non-dilutive to Grammarly, meaning General Catalyst won’t get an equity stake in the company with this financing, but rather a cut of its revenue until a certain cap is met.
The company plans to use its new capital “to scale sales and marketing and for strategic acquisitions.”
Founded in 2009, Grammarly had previously raised a total of $400 million in funding, according to Crunchbase data. General Catalyst also participated in the company’s $110 million funding round in 2017 and its $90 million raise in 2019. Last October, General Catalyst raised $8 billion in new capital with an eye toward “turbocharging” its investments in sectors such as AI, defense, climate, healthcare and fintech.
Grammarly’s latest capital infusion underscores the extent to which AI has come to dominate venture funding. Over the past year, nearly half of U.S. venture funding went to AI-related enterprises, Crunchbase data shows. Later stage had the largest share, with roughly 61% of venture deals related to AI.
AI dominates globally as well. Per Crunchbase’s global funding report, AI was the leading sector for venture funding in the first quarter, with $59.6 billion invested. The first quarter marked the strongest quarter for AI funding ever, with a staggering 53% of global funding going to the AI sector alone.
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Illustration: Dom Guzman
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