Startups and developers building AI-powered apps are still exploring how to turn their products into profitable businesses. Koah, a startup that recently raised $5 million in seed funding, is betting on advertising as a key solution for monetizing AI applications.
“Once these things get outside San Francisco, there’s only one way to make [them profitable] on a global scale,” Koah co-founder and CEO Nic Baird told TechCrunch over Zoom. “It’s happened time and time again.”
Koah isn’t attempting to place ads in ChatGPT itself but is focused on the “long tail” of AI apps built on top of large models, particularly those with user bases outside the United States. Early AI products monetized wealthier “prosumer” users via subscriptions, but apps targeting regions such as Latin America struggle to generate subscription revenue despite having the same inference costs as apps serving U.S. audiences. “They have the same inference costs as everyone else,” Baird said, highlighting the need for alternative monetization methods.
By integrating contextually relevant ads into AI chats, Koah aims to make apps financially viable without requiring heavy venture funding. The company is already serving ads in apps like AI assistant Luzia, parenting app Heal, student research tool Liner, and creative platform DeepAI. Advertisers include UpWork, General Medicine, and Skillshare. The ads are marked as sponsored content and appear at relevant moments in user interactions—for instance, offering UpWork connections to users asking about startup strategies.
Many publishers have been skeptical about the effectiveness of ads in AI chats, while older adtech solutions like Admob and AppLovin yielded limited results. Baird claims Koah achieves clickthrough rates of 7.5%, four to five times higher than competing solutions, with early partners earning $10,000 in the first 30 days. His goal is for ads to feel relevant enough to actually enhance user engagement.
Forerunner led Koah’s seed round, with participation from South Park Commons and AppLovin co-founder Andrew Karam. “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,” said Forerunner partner Nicole Johnson. She described Koah as “building the essential monetization layer for consumer AI services.”
Baird emphasized that AI chats occupy the middle of the purchase funnel—between awareness-driven Instagram ads and transaction-driven Google searches. “People are not transacting on AI — they’re just not,” he said. “It’s not interesting to me to try to figure out, ‘How do we show a display ad in AI?’” Instead, Koah focuses on capturing users’ commercial intent and delivering relevant solutions within the chat experience.
