Grammarly, a top writing assistant software tool, has received a $1 billion commitment from General Catalyst.

The 14-year-old writing assistant startup will allocate the new funds to its sales and marketing initiatives, thereby freeing up existing capital to pursue strategic acquisitions.

In contrast to a conventional venture round, General Catalyst will not receive an equity stake in the company as compensation for the investment.

Grammarly will instead repay the capital and a fixed, restricted percentage of the revenue it generates from the use of General Catalyst’s funds.

The investment is sourced from General Catalyst’s Customer Value Fund (CVF), a capital allocation that assists late-stage entrepreneurs with predictable revenue streams in the deployment of new funding to support the expansion of their businesses.

Capital that is secured by a company’s recurring revenue is essentially “loaned” by CVF’s alternative financing strategy.

For companies like Grammarly, this form of financing is advantageous because it’s nondilutive and does not recalibrate the company’s valuation.

During the apex of the ZIRP (zero interest-rate policy) regime in 2021, Grammarly was valued at $13 billion.

Nevertheless, an investor in the company who requested anonymity has stated that the company’s valuation in the current market is substantially lower.

Grammarly did not promptly respond to a request for comment.

Grammarly acquired Coda, a productivity startup, in December and appointed its CEO, Shishir Mehrotra, to serve as its CEO.

Following the acquisition, the organization is transitioning into an AI productivity tool and generates an annual revenue exceeding $700 million.