Grammarly, known as the writing assistant, has made the largest financial deal in its history — it has received a non-dilutive (i.e., acquired without selling shares) investment!
Who provided the capital?
General Catalyst — specifically from their special Customer Value Fund (CVF).
This investment is not ordinary. What’s the difference?
Grammarly receives this money, but General Catalyst does not receive shares in the company.
Grammarly returns this money through a certain percentage of income.
This is non-dilutive funding, which means that Grammarly does not reduce its value and retains control.
In short, Grammarly is not giving up its stake, but is acquiring the capital it needs to grow.
What will this money be used for?
Grammarly will spend this money mainly on sales and marketing. This will free up internal capital and allow them to acquire strategic companies. (Fun fact: Grammarly recently acquired a startup called Coda.)
What is the company’s value?
In 2021, Grammarly was valued at $13 billion (at the time of ZIRP). Today, that valuation is much lower, but the company still generates over $700 million in annual revenue.
What is a CVF?
General Catalyst’s Customer Value Fund (CVF) is a “debt-like” capital injection into companies with stable revenue. The fund has previously been used by companies like Lemonade and Ro.
Grammarly has received investment but not dividends.
The company’s growth in AI and productivity will continue.
Leave a Reply