Grammarly makes first investment, taking stake in Seattle document engineering startup Docugami – GeekWire

Grammarly CEO Brad Hoover says the investment in Seattle startup Docugami reflects a shared ethos between the two companies. (Grammarly Photo)

Grammarly, the San Francisco company that makes technology to help people communicate more effectively, has made the first investment in its 11-year history, participating in a $10 million seed funding round for Docugami, a Seattle-based AI document engineering startup.

Brad Hoover, the Grammarly CEO, said in an interview that the investment presented “a unique opportunity to further our mission” by supporting a company aligned with Grammarly’s efforts to help people improve how they communicate.

The companies connected after Hoover and Docugami CEO Jean Paoli, a former Microsoft executive, met serendipitously at an event last year.

They said they don’t have plans to partner on technology or products in the short term, but didn’t rule out the possibility for the future.

“We’re both pursuing a similar mission at some level, in terms of really using this new type of technology to help people with the very difficult process of communication,” Hoover said.

Grammarly has expanded beyond its initial focus on spelling and grammar to offer a broader range of technologies, including a “tone detector” that helps users understand the potential impact of their words. The company offers plugins and tools for a wide range of writing and communication platforms.

The company is also facing increased competition from Microsoft, which recently released its own Microsoft Editor for the Chrome and Edge browsers.

Docugami uses artificial intelligence to help companies create and extract information from unstructured documents. Paoli was a co-creator of the industry-wide XML 1.0 standard, Microsoft InfoPath and modern Microsoft Office file formats. He says the company is on a mission to end “document dysfunction” by creating new value from the large amount of information stored outside of structured databases.

Docugami CEO Jean Paoli. (GeekWire Photo / Kurt Schlosser)

Docugami and Grammarly are “on the same wavelength,” Paoli said, calling it an honor for Docugami to be the recipient of Grammarly’s first investment.

The companies didn’t disclose the amount of Grammarly’s investment or the size of its resulting stake. Docugami announced the $10 million seed funding round in February, but Grammarly’s participation wasn’t disclosed at the time. The round, which was unusually large at the seed stage, was led by Silicon Valley venture fund SignalFire, with participation from NextWorld Capital and veteran tech executives and angel investors

Grammarly raised its own $90 million funding round last fall at a valuation of more than $1 billion. The company has been cash-flow positive and profitable for most of its history, giving it the flexibility to participate in Docugami’s funding round, Hoover said.

Hoover said Grammarly doesn’t have any specific plans to invest in additional companies. However, he added, “when we see great teams that are making meaningful progress in important aspects of our industry, we’ll definitely consider it.” He called it “a unique time to be investing,” given everything going on in the world right now.

Docugami has doubled its team to 20 people since raising its seed funding round.