General Catalyst invested $1 billion in Grammarly without taking a stake in the company

Grammarly, founded in 2009 by three Ukrainians — Oleksiy Shevchenko, Maksym Lytvyn, and Dmytro Lider — has raised $1 billion from venture capital fund General Catalyst, TechCrunch reports.

The investment was provided in the form of interest-free financing through the Customer Value Fund (CVF), a tool to support companies with predictable revenue.

Unlike traditional rounds, General Catalyst does not receive a stake in the business. Grammarly will return the investment by paying a fixed percentage of the revenue generated by the funds raised. This avoids reducing the company's valuation, which was $13 billion in 2021 but is now believed to be significantly lower.

Grammarly uses AI to improve English writing. The service has over 30 million daily users and over $700 million in annual revenue. In December 2024, the company acquired the Coda platform, after which its CEO Shishir Mehrotra led Grammarly, which now positions itself as an AI-powered productivity platform.

General Catalyst is one of the leading US venture capital funds, founded in 2000. It has invested in companies such as Airbnb, Stripe, Snap, Deliveroo, GitLab and Canva. Its Customer Value Fund specializes in financing already successful companies with stable income that do not want to dilute capital or reduce the valuation of the business.

The new investment will allow Grammarly to focus on scaling, marketing, and likely further strategic acquisitions.