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Union Square Ventures led a $30M round in AI companion app Tolan, which PitchBook values at more than $268M, up from $120M, as annual recurring revenue passes eight figures.
Key Takeaways
- Tolan raised $30M led by Union Square Ventures, with Khosla Ventures and Homebrew participating.
- PitchBook estimates the valuation at over $268M, up from $120M; the company has not disclosed it.
- Annual recurring revenue more than doubled year on year to the double-digit millions; the company is not yet profitable.
Lead
Tolan, the AI companion app built by Portola, announced a $30M funding round on October 20, 2026, led by Union Square Ventures. Khosla Ventures and Homebrew also took part. The raise takes total funding to roughly $60M, double the amount the company had before the round.
PitchBook puts the post-money valuation at more than $268M, against $120M previously. Tolan has not confirmed that figure, and it has not named the round stage. The deal follows a $20M Series A led by Khosla Ventures in July 2025.
What Does Tolan Actually Do?
Tolan lets users build an ongoing relationship with a personalized AI character that remembers past conversations. The characters take a deliberately cartoonish, non-human form and are designed to avoid romantic and sexual interactions. Users turn to them for emotional support and for advice on relationships and family life.
The product has since moved beyond conversation. Tolan now handles practical tasks such as meal planning, shopping and family organization. That puts it closer to a general-purpose assistant than the chat-only companion apps it launched alongside in February 2025.
The company was founded in 2023 by Quinten Farmer, Evan Goldschmidt and Ajay Mehta. Farmer previously co-founded the fintech startup Even, which Walmart acquired in 2022 for $300M.
How Big Is the Business Now?
About 250,000 people use Tolan each month, and they held more than 70 million conversations over the past year. The company says annual recurring revenue more than doubled year on year to the double-digit millions. It also reports a 115% year-on-year improvement in its 30-day net user retention metric.
The user base skews toward caregivers. Around 70% of users are women, 40% are parents, and about one in six looks after an ageing parent. In an August survey, 94% of respondents said they had turned to Tolan when people in their lives were unavailable.
The scale looks different from the last round. In July 2025 Portola cited more than 3 million downloads and more than 100,000 paid users. Against that, 250,000 monthly users is a smaller headline number, though the company now frames the business around engagement and retention rather than installs.
What Does the Valuation Jump Imply?
The estimated valuation has risen by more than 120% since the last PitchBook mark, while revenue has roughly doubled. The multiple is rich but not unusual for a consumer AI subscription business with fast-growing recurring revenue. Investors are paying for the retention figures and for the shift toward task completion, not for download counts.
The valuation is also an outside estimate. The company has not published a post-money figure or its revenue multiple, and it has not stated how much of the $30M is primary capital.
The company has said it is not yet profitable. It also plans to introduce its first free tier. A free tier should widen the funnel, but it will test whether the paid conversion that built the revenue base holds when a no-cost option exists.
What Comes Next for AI Companions?
The company's own plans point to two tests. The first is whether practical assistance keeps users engaged longer than emotional companionship alone. The second is whether a free tier raises user numbers enough to offset any lost subscription revenue.
The category also carries regulatory and safety questions. Companion apps face scrutiny over dependency and over interactions with minors. Tolan's non-human design and its avoidance of romantic content position it on the cautious end of that spectrum. Investor interest suggests that positioning is seen as an advantage rather than a limit on growth.
Outlook
Tolan has doubled its funding to about $60M, with Union Square Ventures replacing Khosla Ventures as lead. Revenue is in the double-digit millions and retention is improving, but profitability has not arrived. The free tier launch and the shift from conversation to task handling will show whether the estimated $268M valuation holds up as the user base broadens.
