By Hamza Faisal

Tolan, the San Francisco startup building an AI companion aimed at everyday users rather than tech professionals, has raised $30 million in new funding, according to a report by Upstarts Media. The round included Union Square Ventures, Khosla Ventures and Homebrew, and doubles the total capital the company has raised to date.

The startup declined to disclose its new valuation, but said the round represents a significant step up from its previous mark of $120 million, per PitchBook data. PitchBook estimates the new valuation at more than $268 million, with what it calls "medium confidence."

An AI companion for everyday life

Founded in 2023 by Quinten Farmer — formerly chief executive of the employer-linked neobank Even, which was sold to Walmart in 2022 — Tolan lets users create a named, customisable AI character that builds a persistent memory of conversations over time. Users talk to their companion through a cartoonish character designed to help them manage daily tasks, navigate relationships and emotions, and work toward their goals.

That positioning sets Tolan apart from the productivity-focused AI tools dominating venture capital headlines. Around 70 percent of its 250,000 monthly active users are women, 40 percent are parents, and one in six is actively caring for an aging relative — a demographic profile that looks very different from the typical AI power-user crowd.

Why investors are buying in

Tolan is one of the few AI companions to find real traction. The company says its users have had more than 70 million conversations over the past year. Annual recurring revenue has more than doubled year over year and now sits solidly in the double-digit millions, and net user retention improved by 115 percent after 30 days in the app, according to the company.

The startup generates revenue from tiered memberships, which are currently required for full access. The new funding will be used to expand use cases and introduce a free tier for the first time, widening access beyond users who pay between $10 and $200 per month. It has also been steadily moving away from OpenAI's models and now runs open-source models on its own GPU infrastructure to keep inference costs manageable.

One AI they trust, not many agents they tolerate

Farmer's pitch to investors is straightforward: people want one AI they trust, not many agents they tolerate. Tolan appears to have found a balance between being helpful and avoiding the perception of being too strange — a line other AI companions have stumbled over.

Friend's pendant-based companion faced public shaming — users dubbed it "very cringe," The New York Times called it "hated," and Wired said it "has no soul." Character.ai, another former contender in the space, recently filed for bankruptcy after its founders returned to Google, with remaining staff transitioning to Disney, which bought some of the company's assets.

With fresh capital, a free tier on the way and a user base that keeps coming back, Tolan is betting that the future of AI companionship belongs to the assistant that feels least like a machine.

By Hamza Faisal