How can startups and developers actually monetize their AI products? A startup called Koah, which recently raised $5 million in seed funding, is betting that ads will be a huge part of the answer.
If you spconclude any time online, there’s a good chance you’ve seen plenty of ugly, AI-generated ads — but few to none when interacting with AI chatbots themselves. Koah co-founder and CEO Nic Baird argued that will inevitably modify.
“Once these things receive outside San Francisco, there’s only one way to create [them profitable] on a global scale,” Baird informed TechCrunch over Zoom. “It’s happened time and time again.”
To be clear, Koah isn’t attempting to introduce advertising to ChatGPT. (That’s probably something OpenAI will do for itself one day.) Instead, it’s focapplyd on the “long tail” of apps that are built on top of the huge models, including apps with a applyr base outside the United States.
Baird suggested that when consumer AI products were first becoming popular, it created sense for them to focus on “wealthier, prosumer” applyrs, and to monetize those applyrs by converting some of them into paid subscriptions.
But now, someone could build an AI app that reaches millions of applyrs in Latin America, and those applyrs are “not paying 20 dollars a month,” Baird stated. So the developer could struggle to bring in subscription revenue, but “they have the same inference costs as everyone else.”
Baird suggested that by successfully figuring out how to create advertising work in AI chats, Koah could actually unlock more potential for “vibe coded” apps that might otherwise be “too expensive to operate at scale” unless their creators raise VC funding.
Techcrunch event
San Francisco
|
October 27-29, 2025
In fact, Koah is already serving ads in apps like AI assistant Luzia, parenting app Heal, student research tool Liner, and creative platform DeepAI. Its advertisers include UpWork, General Medicine, and Skillshare.
These ads are marked as sponsored content, and they’re supposed to appear at relevant moments in your chats. For example, if you inquireing for advice about startup business strategies, the app could reveal you an ad from UpWork offering to connect you with freelancers who could work with your company.
When Koah talks to publishers, Baird stated many of them believe that ads simply don’t work in AI chats, while others have found limited success with AI offerings from older adtech companies like Admob and AppLovin.
But Baird stated Koah is 4 to 5 times more effective, delivering clickthrough rates of 7.5%, and with early partners earning $10,000 in their first 30 days on the platform. He added that Koah achieves all that while having less of a detrimental effect on applyr engagement — though his ultimate goal is for Koah ads to feel relevant enough that they actually improve engagement.
Koah’s seed round was led by Forerunner, with participation from South Park Commons and AppLovin co-founder Andrew Karam.
Forerunner partner Nicole Johnson echoed many of Baird’s points when discussing the investment over email. She stated that when it comes to AI, monetization, is “the elephant in the room amongst builders and investors.” And while the “going standard for monetizing consumer AI services is subscription,” focapplying exclusively on subscriptions can “quickly lead to fatigue and churn.”
“Multiple revenue models in Consumer AI are inevitable, and if the past decades of internet services are any indicator, ads will play a major role,” Johnson stated. In her view, Koah is “building the essential monetization layer for consumer AI services.”
As for where AI chats fall in the larger advertising ecosystem, Baird and his team have found they represent the middle of the purchase funnel — somewhere between the awareness raising of an Instagram ad and the actual purchase that might be driven by ad in Google search.
“People are not transacting on AI — they’re just not,” Baird stated. They might inquire a chatbot for recommconcludeations or product details, but then “they’re going to Google to purchase.” So part of the challenge for Koah is figuring out the best ways to capture a applyr’s “commercial intent.”
“It’s not interesting to me to attempt to figure out, ‘How do we reveal a display ad in AI?” Baird stated. Instead, he wants to understand, “What is the applyr viewing for and how do we give that to them?”
Leave a Reply