Grammaticly has protected an obligation of $ 1 billion from general catalyst. The 14-year-old startup of writing assistant will use the new funds for his sales and marketing efforts, which releases existing capital to do strategic acquisitions.
Unlike a traditional venture round, General Catalyst does not receive a share interest in the company in exchange for the investment. Instead, Grammarly will repay the capital, along with a fixed, covered percentage of the income it generates from the use of the funds of General Catalyst.
The investment comes from the Customer Value Fund (CVF) by General Catalyst, a capital pool that helps startups in a late stage with predictable income flows that use new financing, specifically for growing their business. The alternative financing strategy of CVF ‘borrow’ in essentially capital that is guaranteed by the recurring income of a company.
For companies such as Grammarly, this form of financing is beneficial because it is not silence and the appreciation of the company is not reset. Grammar was appreciated at $ 13 billion in 2021, during the peak of the ZIRP era (Zero Interest-rate Policy). However, the appreciation of the company in the current market is considerably lower, according to an investor in the company who asked to remain anonymous.
Grammar did not immediately respond to a request for comment.
Grammarly acquired productivity in December Startup CODA And named his CEO, Shishir Mehrotra, to lead grammar. The company, which evolves into an AI productivity tool after the acquisition, has an annual income from More than $ 700 million.
The customer value fund of General Catalyst has provided financing Nearly 50 companiesIncluding Insurtech Lemonade and TeleHealth platform RO. CVF maintains its own various limited partners and was not included in the recent capital increase of the company of $ 8 billion.
General Catalyst Head Honcho Hemant Taneja and Pranav Singhvi, co-head of CVF, spoke larger last fall with Techcrunch about the specialized financing strategy of the group.
