Grammarly secures $1B in nondilutive funding from General Catalyst

Grammarly has secured a $1 billion commitment from General Catalyst. The 14-year-old writing assistant startup will use the new funds for its sales and marketing efforts, freeing up existing capital to make strategic acquisitions. Unlike a traditional venture round, General Catalyst will not receive an equity stake in the company in return for the investment. Instead, Grammarly will repay the capital along with a fixed, capped percentage of revenue it generates from the use of General Catalyst’s funds. The investment comes from General Catalyst’s Customer Value Fund (CVF), a capital pool that helps late-stage startups with predictable revenue streams deploy new funding specifically to growing their businesses. CVF’s alternative financing strategy essentially “lends” capital that is secured by a company’s recurring revenue. For companies like Grammarly, this form of financing is advantageous because it’s nondilutive and does not reset the company’s valuation. Grammarly was valued at ... Read full article.