Known as much for its flagship write-assist offering as for ubiquitous advertising, the Grammarly Editor platform raised USD 1bn from General Catalyst‘s Customer Value Fund. The funds will operate like a loan or credit line with capped returns tied to revenue, rather than an equity stake.
The financing, announced on X on May 29, 2025, by the company’s current CEO, Shishir Mehrotra, is structured in a way that allows General Catalyst to increase their investment in Grammarly without diluting ownership by issuing new shares to other investors — according to Reuters.
The Reuters article also said the capital is intended to support and accelerate Grammarly’s growth through increased spending on sales, marketing, and strategic acquisitions. The investment is also expected to allow 16-year-old Grammarly to reallocate funds towards product development, particularly expanding its AI-driven offerings with communication-centric tools and integrated external applications, Reuters reported.
Mehrotra, who founded the AI collaborative platform Coda, said in an interview with Reuters that “Grammarly is going through a huge transformation… from being what is mostly known as a single-purpose agent to being an agent platform.” Coda completed a merger with Grammarly in January 2025.
“Grammarly is going through a huge transformation… from being what is mostly known as a single-purpose agent to being an agent platform.” — Shishir Mehrotra, CEO of Grammarly
This is not General Catalyst’s first show of faith in Grammarly. The firm led a USD 90m investment round in 2019 and likely propelled the Coda acquisition by being an investor in both companies.
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Reflecting on the deal, podcasters from “This Week in Startups” (TWIST) remarked that “SaaS is a difficult business and maybe [General Catalyst] thought ‘hey we could put these two companies together [and] have a stronger company.’ This will help increase the value of the company… so if they have some LPs [Limited Partners] who want to get a return on capital you get the double benefit — you’re loaning them money instead of having them take the money from a bank, so it’s all in the family.”
As a SaaS company, Grammarly faces potential headwinds, according to the TWIST podcast. The impact of AI tools, for example, could lead to a need for SaaS companies to re-evaluate pricing models, potentially moving away from per-seat to a consumption model, which historically has not been popular.
As of Q2 2025, Grammarly is a profitable at-scale business with an annualized revenue of more than USD 700m, supported by an individual user base estimated at 40 million and over 50,000 Grammarly Business accounts.
Mehrotra does not discount a future IPO: “I’m right now just focused on making sure we’re innovating with new products, growing as fast as we can. But when we feel ready, we’ll go public,” he told Reuters.
The investment underscores strong confidence in the company’s proven AI expertise and deep understanding of language, particularly given General Catalyst’s track record of backing companies with reliable revenue models (including the Viva Translate platform).
According to PitchBook, Grammarly was valued at USD 13bn as far back as 2021.