How do startups and developers actually make money from AI products? A startup called Koah, which just raised $5 million in seed funding, is betting the answer lies in advertising.
If you’ve been online recently, you’ve probably seen plenty of clunky, AI-generated ads — but they’re largely absent when using AI chatbots. Koah co-founder and CEO Nic Baird says that won’t last. “Once these things get outside San Francisco, there’s only one way to make [them profitable] on a global scale,” Baird told TechCrunch. “It’s happened time and time again.”
Koah isn’t trying to wedge ads into ChatGPT — OpenAI will likely do that itself — but instead is targeting the “long tail” of apps built on large language models. Many of these apps are aimed at international markets where subscriptions are harder to sell. Baird pointed out that while users in regions like Latin America may not pay $20 per month for AI, developers still face the same inference costs as everyone else.
That’s where Koah steps in. By figuring out how to make ads work inside AI chat interfaces, Baird argues the company can help developers build “vibe coded” apps that would otherwise be too expensive to scale without VC funding.
Koah is already placing ads in apps like Luzia, Heal, Liner, and DeepAI, with advertisers including UpWork, General Medicine, and Skillshare. These ads show up as sponsored content and are designed to feel contextually relevant. For example, a user asking about startup strategies might see an UpWork ad offering freelance support.
Skepticism remains. Some publishers doubt ads can even work in AI chats, while others report limited results using older adtech platforms like Admob or AppLovin. But Koah claims its approach is delivering clickthrough rates of 7.5% — four to five times higher — with some partners making $10,000 in their first 30 days. Baird insists the ads won’t just minimize engagement drop-off but could actually enhance it if done right.
Koah’s $5 million seed round was led by Forerunner, with backing from South Park Commons and AppLovin co-founder Andrew Karam. Forerunner partner Nicole Johnson called monetization “the elephant in the room” for consumer AI, warning that subscriptions alone risk user 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,” she said, describing Koah as “the essential monetization layer for consumer AI services.”
Koah sees AI chats as sitting in the middle of the ad funnel — after awareness from platforms like Instagram, but before the purchase decision driven by Google search. “People are not transacting on AI — they’re just not,” Baird said. They may ask for product recommendations in a chatbot, but the actual buying still happens elsewhere. His challenge now is figuring out how to capture that intent without resorting to clunky display ads. “It’s not interesting to me to try to figure out, ‘How do we show a display ad in AI?’” he said. “Instead, what is the user looking for and how do we give that to them?”
