Welcome to the forefront of conversational AI as we explore the fascinating world of AI chatbots in our dedicated blog series. Discover the latest advancements, applications, and strategies that propel the evolution of chatbot technology. From enhancing customer interactions to streamlining business processes, these articles delve into the innovative ways artificial intelligence is shaping the landscape of automated conversational agents. Whether you’re a business owner, developer, or simply intrigued by the future of interactive technology, join us on this journey to unravel the transformative power and endless possibilities of AI chatbots.
AI startups are growing faster than they’re finding revenue—Koah is betting ads are the fix.
The San Francisco-based company, which embeds sponsored ads directly into AI chatbots, has raised $20.5 million in a Series A round led by Theory Ventures. Tomasz Tunguz, founder and general partner of Theory Ventures and a Google AdSense veteran, also became a member of the board as a part of the investment.
The funding brings Koah’s total to more than $26 million as it looks to position itself as a monetization layer for generative AI, building a platform similar to Google’s AdSense—which lets website publishers monetize their sites with targeted ads—but designed for AI.
“A lot of our friends were building consumer AI apps, and they couldn’t make money,” co-founder and CEO Nic Baird told ADWEEK. “We looked into subscriptions, paywalls, usage based stuff, tokens and credits and gamification. But at the end of the day, we came to the conclusion that the most scalable and simple way for most people to do this is with sponsorships”
Founded in September 2024 and formally launched as a two-sided marketplace earlier in 2025, Koah connects developers building AI apps with advertisers looking to reach users inside conversational interfaces.
As AI companies grapple with the high cost of running large models, monetization has emerged as one of the sector’s biggest unresolved questions. Subscription models can be difficult to scale, especially for consumer apps competing for attention. That has led to bigger players like OpenAI to facilitate ads inside ChatGPT. Smaller players like Perplexity too have tinkered with ads while OpenAI’s rivals like Anthropic have taken an anti-ads approach to monetize its flagship product Claude. [link to previous reporting in this graf]
With fresh funding, Koah plans to expand its engineering team, build out analytics tools and new ad formats, including brand-sponsored polls (such as Hulu), aiming to offer a more engaging alternative to standard search ads.
Koah’s pitch hinges on a shift already underway: people are beginning to search, compare, and make decisions inside AI tools rather than traditional search engines or social feeds.
That behavior has caught the attention of advertisers—particularly those with large budgets in travel, finance, and CPG–that Koah said it has onboarded. Baird declined to share specifics.
“A lot of their new customer base, especially younger demographics, are moving to AI chatbots,” Baird said. “They are trying to figure out how to make sure they are top of mind as behavior shifts away from traditional media.”
Koah inserts text-based sponsored messages into conversations, clearly labeled as ads and separated from the chatbot’s response. Ads are matched to user intent—similar to keyword-based targeting in search—and measured through click-through rates.
Once onboarded, advertisers can set parameters such as audience demographics and location. Koah then uses a mix of AI models, including tools from OpenAI, to generate ad copy aligned with the conversation.
The startup takes a 30% cut of revenue generated across its network.
On the AI interfaces side, Koah works with companies such as Liner, a student-focused search tool, and DeepAI. Another partner, Viro, positions itself as an eco-friendly ChatGPT alternative and uses Koah-generated revenue to offset operating costs.
After four months on the platform, Viro has processed more than 1 million queries, with ad revenue helping cover API expenses and fund renewable energy initiatives. The app flags ads with disclaimers such as “This ad funds climate restoration” and “This ad powers renewable energy.”
Koah says its network has grown to more than 2 million monthly active users over the past year, with users averaging 165 queries per month. In total, the platform has processed more than 350 million queries and delivered more than 35 million ad impressions.
“Ads are necessary for any of these apps to grow beyond burning hundreds of billions of dollars of venture capital,” Baird said. “It would be a tragedy to see one of the most powerful tools we’ve ever created be unavailable to a huge part of the population because we don’t want to do ads.”
Trishla is an Adweek staff reporter covering AI and tech.
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