Text-Checking Software Maker Grammarly Is Worth $13 Billion in Latest Funding Round

  • Around 30 million people use Grammarly each day.
  • The start-up doesn't see a direct competitor, although Microsoft offers some similar capabilities.

Grammarly, a start-up whose software highlights issues as people write in its web app and other programs, said Wednesday that it sports a $13 billion valuation after taking on $200 million in new funding from Baillie Gifford, General Catalyst, funds and accounts managed by BlackRock and other investors.

The backing shows investors are willing to pay a premium for a specific type of productivity software, despite the dominance of cash-rich companies such as Google and Microsoft in the market.

Notion, a start-up whose software enables people to create collaborative documents, said in a statement last month that it had raised money at a $10 billion valuation, and Forbes reported in March that Airtable, a start-up developing next-generation spreadsheet software, was worth about $5.8 billion.

Grammarly's free service picks up on misspellings, grammatical mistakes and unnecessary words. A paid version offers additional types of recommendations and detects plagiarism. Business and enterprise tiers help workers stay compliant with style guides and a common brand voice. Around 30 million people use Grammarly every day.

Google Docs and Microsoft Word can do some of what Grammarly can do. Services such as Advance Publications-owned Turnitin can find instances of plagiarism. But given all of its capabilities, Grammarly doesn't have a single direct competitor, CEO Brad Hoover told CNBC in an interview.

The start-up performs benchmarks to see how it's performing on grammatical feedback, relative to alternatives.

"We're best in class there," Hoover said. "That's also because we've been focusing on this for so long and built up quite a bit of infrastructure under the hood to enable us to return these broad, precise, explainable results."

But Grammarly has been focused on English, and it will continue to be, Hoover said. Meanwhile, Microsoft's Editor feature for browser extensions and Office applications supports over 20 languages.

Dmytro Lider, Max Lytvyn and Alex Shevchenko started Grammarly in 2009. Today the company has over 600 employees, with offices in San Francisco; Vancouver, British Columbia; and the Ukrainian city of Kyiv.

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