Tolan, an AI companion designed to help people manage their daily lives, navigate relationships and emotions, and achieve their goals, just expanded its runway with an additional $30 million in capital.
The company’s investors in the latest round, which includes Union Square Ventures, Khosla Ventures, and Homebrew, double the total amount raised to date and take the company’s valuation to more than $120 million, according to a new report from Upstarts Media. (The startup hasn’t disclosed its new valuation, but PitchBook estimates it with “moderate confidence” at more than $268 million.)
Users engage with Tolan’s app through cartoon-like characters who aim to provide support and help them get things done.
Tolan makes money from tiered memberships required for full access to all features. The company told Upstarts Media that annual recurring revenue is now in the “double digit millions of dollars.”
The startup claims to have over 250,000 active users with over 70 million conversations in the past year, making it one of the few AI companions to garner some traction. Tolan’s team told the news outlet that about 70% of users are women and 40% are parents. (Anecdotally, the app is said to particularly appeal to neurodivergent people who might benefit from additional support, such as emotional support or help organizing tasks.)
Compared to his peers, Tran seems to have found a balance between being useful without seeming too weird. Compare this to the public humiliation faced by Friend’s pendant-based AI companion. Users called Friend “so disgusting,” The New York Times called it “disgusting,” and Wired said it was “soulless.”
Meanwhile, Character.ai, another former front-runner in the space, recently filed for bankruptcy after its founder returned to Google. (The rest of the staff has been transferred to Disney, which has acquired some of the assets.)
But Tolan could face increased competition from modern AI agents that help users plan, organize, and accomplish tasks and goals, rather than just talk about them. For example, Meta gave its AI agent Muse a cute avatar for users to talk to. We plan to release this as a hardware product in the future.
The startup also needs to avoid the risks of providing AI-powered psychological support, given multiple lawsuits have been filed against general-purpose AI app makers alleging that chatbot interactions contributed to users’ suicides.
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