Tolan raises another 30 million dollars for its cartoon AI companion, while Character.AI files for bankruptcy

AI as a friend has so far been sold more than it has been bought. Tolan is one of the few that claims to have broken through. The app, meant to help users organise their day, navigate relationships and emotions and reach their goals, has raised another 30 million dollars (about 26 million euros). Union Square Ventures, Khosla Ventures and Homebrew took part in the round, which doubles the total invested in the company.

The new valuation has not been disclosed. The previous one was 120 million dollars, and the PitchBook database estimates the current figure at over 268 million dollars (about 230 million euros), with "medium confidence", as they themselves put it. An estimate, then, not a fact. The money comes from paid memberships in several tiers, without which not all features unlock. The company claims its annual recurring revenue is "in the tens of millions" of dollars.

Users chat with a cartoon character meant to calm them down and nudge them through their tasks. According to the team, the app has more than 250,000 active users, who held over 70 million conversations in the past year. About 70 percent are women and 40 percent are parents. It is said to be especially popular with neurodivergent people who need extra support, whether emotional or with organising tasks.

The AI-companion market is full of failures. The Friend pendant was mocked by users and the media alike, and Character.AI, once the main player, recently filed for bankruptcy after its founder returned to Google. The remaining staff are moving to Disney, which bought part of the assets. Tolan has evidently found a way to be useful without seeming creepy. But the next threat is not another cartoon buddy - it is AI agents that do not just chat, but get things done. Meta has already given its agent Muse a cute avatar and is announcing a hardware version too.

The hardest question is not financial. Several companies making general-purpose AI already face lawsuits alleging that conversations with chatbots contributed to users' suicides. Tolan is selling precisely emotional support. When a machine becomes the first port of call for loneliness and stress, who is responsible if some advice goes wrong: the app, the investors, or nobody?