Grammarly raises $200M to expand its AI-powered writing suggestions platform

San Francisco, California-based Grammarly, which develops an AI-powered writing assistant, today announced that it raised $200 million, valuing the company at $13 billion post-money. Baillie Gifford led the round with participation from funds and accounts managed by BlackRock. Grammarly global head of product Rahul Roy-Chowdhury says the funding will be put toward further developing the company’s technology and “accelerat[ing] efforts to help people communicate … in our digital-first world.”

As enterprises increasingly embrace digitization, the over $1.2 billion AI writing assistant market is expected to grow at a compound annual growth rate of 27.6% from 2018 to 2028. According to a survey from John Snow Labs and Gradient Flow, 60% of tech leaders indicated that their budgets for natural language processing — which encompasses technologies like Grammarly’s — grew by at least 10% compared to 2020, while a third said that their spending climbed by more than 30%.

“From changes in our tone to workplace communication shifts at large, the global pandemic has left a lasting impact on how we communicate. The shift to remote-first everything — including school and work — has only increased the need for digital communication assistance like ours,” Roy-Chowdhury told VentureBeat via email. “Poorly-written communication was already estimated to cost businesses billions annually in lost productivity — and that was well before the pandemic forced people to start communicating remotely across all kinds of new connectivity and productivity tools.”

A brief history

The brainchild of Ukrainian developers Alex Shevchenko, Max Lytvyn, and Dmytro Lider, Grammarly was founded in 2009 as Sentenceworks shortly after the sale of Lytvyn and Shevchenko’s plagiarism-checking startup MyDropBox to Blackboard. One of Grammarly’s first products was a barebones WYSIWYG editor into which users could paste text, which evolved into an app that provided spelling and syntax suggestions.

In 2012, Grammarly pivoted from a largely academic customer base to the broader consumer market, rolling out subscription plans and launching ads on Facebook, Twitter, and YouTube. In 2014, Grammarly debuted plugins for Microsoft Office that integrated its grammar checker with Outlook and Word. And in 2015, the company launched the Grammarly browser extension for Chrome and Safari. A Firefox extension followed shortly after, as did an add-on for Google Docs; the message- and email-scanning Grammarly Keyboard for iOS and Android; and a desktop client for MacOS and Windows.

Today, Grammarly offers its entry-level, English-only Grammarly Premium service for $30 a month (or $144 a year), while the enterprise Grammarly Business tier starts at $25 per user per month. Both add style and vocabulary recommendations across all platforms as well as full-sentence rewrites and a tone detector that can identify “tempers” (e.g., “aggressive,” “annoyed,” and “excited”) in emails, documents, and blogs.

“Our business model is a freemium model, in which we offer a free version of our product as well as Grammarly Premium and Grammarly Business, which are paid upgrades,” a Grammarly spokesperson told TechCrunch in a 2019 interview. “The only way Grammarly makes money is through its subscriptions … We don’t sell or rent user data to third parties for any reason, including for them to deliver their ads. Period.”

As of October, eligible Samsung smartphones running the Samsung Keyboard benefit from Grammarly’s spell-checking technology. Grammarly’s writing suggestions are built into the Samsung Keyboard, although access to the company’s premium features requires a subscription.

“Looking toward the future, expanding our critical communication support starts with launching our latest product offering, Grammarly for Windows and Mac. This is a new way to experience Grammarly across any desktop or online application, and a big step in bringing our real-time writing assistance to more places people write — like Microsoft PowerPoint and Slack’s native app, as just a few examples,” Roy-Chowdhury said. “We’ll also double down on partnerships, our next frontier, to expand the reach of our writing assistance … And as more business leaders recognize the direct link between effective communication and business performance, we’re ready to meet the growing demand for Grammarly Business.”

Expanding segments

Spurred by digital transformations that accelerated during the pandemic, a larger share of companies are expected to adopt AI technologies that automatically recommend and tailor copy, particularly in marketing. According to a survey by Phrasee, 63% of marketing teams would consider investing in AI to generate and optimize ad copy. Sixty-five percent trust that AI can generate desirable brand language, the survey found, while 82% believe that their organization would benefit from data that provides insights into how consumers respond to that language.

In an effort to broaden its appeal within markets with specific editing needs, like sales, Grammarly recently introduced Grammarly for Developers, a development kit that enables companies to add Grammarly-powered recommendations to existing web-based apps. Grammarly for Developers, currently in closed beta, handles communication between apps and Grammarly’s cloud services, rendering underlines and suggestion cards, applying text transformations, and providing personal dictionaries.

“With Grammarly for Developers, we’re helping developers deliver a better writing experience to their users while saving them valuable time and resources needed to develop their own technologies,” Roy-Chowdhury added. “Our first Grammarly for Developers product, the Text Editor SDK, brings Grammarly’s communication assistance to any web-based application … Grammarly is [now] available on more than 500,000 applications and sites.”

In June, Grammarly rolled out additional features focused on enterprise communications, including support for up to 50 style guides, snippets, brand tones, and an analytics dashboard. Snippets are preset response templates for quick communication. Brand tones are “tone profiles” that specify which tones team members should use — and avoid. As for the analytics dashboard, it shows metrics that make it ostensibly easier for leaders to identify communication trends and strengths.

Grammarly has competition in Writer, Ginger, ProWritingAid, and Slick Write, which similarly provide an AI-powered writing assistant for a range of use cases. Pitted against Ginger, an English professor writing for Fast Company found that Grammarly’s tips “lack an understanding of nuance,” for example overzealously policing redundancies.

But Grammarly — which has over 600 team members, and is profitable — says it’s managed to attract 30 million users and 30,000 teams to date. New and existing customers include Frost & Sullivan, HackerOne, Lucid, Zoom, Cisco, and Expedia.

The company’s total capital stands at more than $400 million with the latest funding round.

“In 2020 alone, we delivered 1.2 trillion writing suggestions to our global user base.  Sixty-eight percent of the Forbes Global 2000 companies have at least one Grammarly user — and we expect that to increase significantly in the years to come,” Roy-Chowdhury said. “The number of Grammarly Business customers with large-dollar contracts increased by more than 250% this past year alone. We also support over 6,800 nonprofits and nongovernmental organizations from over 150 countries with a free offering, while Grammarly’s education division serves over 2,500 educational institutions with capabilities tailored to their needs.”