Sources: 
Grammarly, the 16-year-old writing assistant startup, has secured a
$1 billion nondilutive funding commitment from General Catalyst’s Customer Value Fund (CVF) to accelerate its growth.
The CVF specializes in providing capital to late-stage startups with predictable revenue streams, offering an alternative financing strategy that
lends capital secured by recurring revenue. This approach allows Grammarly to expand its sales and marketing efforts while preserving existing capital for strategic acquisitions.
Unlike traditional equity financing, this nondilutive funding does not dilute ownership or reset the company’s valuation, a significant advantage in today’s market where valuations have softened since the peak of the zero interest-rate policy (ZIRP) era.
“This form of financing is advantageous because it’s nondilutive and does not reset the company’s valuation,” noted sources familiar with the deal.
An investor, who requested anonymity, highlighted that Grammarly’s valuation has declined compared to the ZIRP peak, making this funding structure particularly beneficial.
The new capital injection will primarily support Grammarly’s sales and marketing initiatives, enabling the company to scale its business more aggressively. Additionally, it frees up existing funds to pursue strategic acquisitions, positioning Grammarly for sustained growth in a competitive market.
This $1 billion commitment underscores General Catalyst’s confidence in Grammarly’s recurring revenue model and growth potential, reflecting a broader trend of alternative financing solutions tailored to mature startups.
As Grammarly continues to expand its footprint, this funding round marks a pivotal moment in balancing growth ambitions with prudent financial management.
Sources: Grammarly secured $1 billion in nondilutive funding from General Catalyst’s Customer Value Fund to boost sales, marketing, and strategic acquisitions. This late-stage financing, backed by recurring revenue, allows Grammarly to expand without diluting ownership or resetting its valuation amid a challenging market.
