Koah, a startup building ad infrastructure for AI applications, has raised $5 million in seed funding to turn conversational interfaces into revenue engines. The round was led by Forerunner with participation from South Park Commons and AppLovin co-founder Andrew Karam, backing Koah’s push to make ads feel native to AI chats rather than tacked on like a banner from the mobile era.
Why ads in AI apps are arriving now
Consumer AI products initially leaned on subscriptions sold to prosumers, a model that worked when audiences were smaller and concentrated in higher-income markets. But as usage spreads globally, many AI apps face a tougher equation: users who won’t pay a monthly fee, paired with inference costs that don’t shrink proportionally. Developers need a second engine for revenue, and history suggests advertising will fill the gap—just as it did across search, social, and mobile.
Koah is betting that conversational contexts unlock a distinct kind of ad unit. Instead of generic placements, its pitch centers on intent: catching the moment when a user asks for help and pairing that with a relevant, clearly labeled offer. The company is not inserting ads into foundation model-owned interfaces; it’s focused on the long tail of AI apps built atop large models, including those serving users outside the United States where subscription conversion is harder.
How Koah’s conversational ads work
Koah’s SDK delivers sponsored messages at contextually appropriate points in a chat, flagged as “sponsored” and designed to read like a helpful recommendation rather than a jarring interruption. If a user asks an assistant for a startup hiring plan, for example, the interface might present an Upwork offer to find vetted freelancers. Ask for help building a study plan and a Skillshare promotion could appear as a next step.
The company is already live inside products such as AI assistant Luzia, parenting app Heal, student research tool Liner, and creative platform DeepAI. Early advertiser categories span work marketplaces, education providers, and health services—sectors where conversational intent and immediate next actions align well.
Early results and what they signal
Koah says its placements are four to five times more effective than conventional mobile ad units in chat interfaces, with average clickthrough around 7.5% and some partners earning roughly $10,000 in their first month on the platform. Just as importantly, Koah reports a smaller negative impact on session length than display-style ads, and claims its goal is the opposite: to improve engagement by making the assistant more useful at the moment a user needs a solution.
In funnel terms, conversational ads look like a middle-of-journey tool. Users rarely complete a transaction inside a chatbot; they research, compare, and then move to search or a merchant site to buy. Koah’s challenge is to capture that commercial intent precisely—via deep links, prefilled lead flows, and contextual calls to action—without turning the exchange into a sales pitch that breaks the experience.
A monetization layer for the AI long tail
Many developers have tested legacy mobile ad networks in AI interfaces, only to find poor fit and low returns. Koah is positioning itself as purpose-built for conversational UX: pacing that respects turn-taking, natural-language creative that mirrors the assistant’s tone, and controls that let publishers govern when an ad can appear. For consumer investors like Forerunner—known for backing category-defining commerce and consumer platforms—the thesis is straightforward: subscriptions alone won’t carry consumer AI, and a native ad layer will be essential.
There is real execution risk. Measurement and attribution are tricky when recommendations happen in free-flowing dialogue. Brand safety and hallucinations demand tight guardrails so offers don’t appear alongside misleading or sensitive content. Privacy expectations are rising, so any contextual targeting must be transparent and compliant. And platform dependency looms: if the largest model providers decide to run their own ad networks, independents will need superior performance and tooling to keep their edge.
Where the new funding goes
Koah plans to expand its SDKs, measurement stack, and policy controls, while growing both sides of its marketplace—more high-intent inventory among AI apps and more advertisers with offers that feel like genuine next steps in a conversation. International coverage is a priority, especially in markets where paid plans underperform but AI assistants are scaling quickly. If Koah can keep relevance high and friction low, it has a plausible path to becoming default infrastructure for monetizing the long tail of AI-driven consumer apps.
The bigger picture is simple: AI apps need sustainable economics. By threading ads into moments of intent—not as banners, but as timely, useful options—Koah is trying to prove that monetization can uphold the user experience rather than erode it. If the results hold as the network grows, ads in AI chats may shift from a novelty to a norm.