Monetizing AI applications has become one of the most pressing challenges for startups. Recently, Koah has stepped in with a bold idea to solve this problem, successfully securing $5 million in seed funding. The company’s core mission is clear: to enable advertising inside AI chats as a sustainable monetization model.
The Problem and the Solution
So far, advertisements are rarely seen in AI chatbots. But Koah’s co-founder and CEO Nic Baird believes this won’t last:
“For AI products to become profitable at a global scale, advertising is the only proven path. History has shown this time and time again.”
Unlike ChatGPT, Koah isn’t focused on embedding ads into the large platforms themselves. Instead, it partners with independent AI applications. For example, Luzia (AI assistant), Heal (parenting app), Liner (student research tool), and DeepAI (creative platform) are already experimenting with Koah’s ad network.
How it works
Koah’s ads appear contextually at relevant moments during conversations. Suppose a user asks for advice on growing a startup; in that case, an UpWork ad might appear, offering freelance help. This approach:
- reduces the feeling of intrusive advertising,
- increases engagement by aligning ads with user intent.
As a result, Koah has achieved a 7.5% click-through rate (CTR), with early partners earning $10,000 within their first month.
What investors say
Koah’s seed round was led by Forerunner, with participation from South Park Commons and AppLovin co-founder Andrew Karam. Forerunner partner Nicole Johnson emphasized the importance of this model:
“Monetization in AI is the elephant in the room for both builders and investors. Relying solely on subscriptions leads to fatigue and churn. Ads are inevitable.”
Where AI chats fit in the funnel
According to Baird, AI chats sit in the middle of the advertising funnel. Unlike Instagram, which builds awareness, or Google search, which drives direct purchases, AI chats help users form intent. They may ask for recommendations inside an AI app but usually complete the purchase elsewhere.
Koah’s challenge is to capture this “commercial intent” and deliver relevant, timely advertising that enhances rather than disrupts the user experience.
Koah is moving beyond traditional banner ads and building an integrated advertising experience within AI conversations. This innovation not only ensures financial sustainability for AI apps but also opens the door to wider adoption in markets where subscriptions alone cannot scale.
