The rapid growth of generative AI has created one of the fastest-expanding technology markets in history, but Israeli startup Velocity believes the next major challenge will not be building AI products, but finding ways to monetize and distribute them at scale.
The company announced Tuesday that it has raised $27 million in seed funding in a round led by NFX and Red Dot Capital Partners, with participation from Stardom Ventures, Corner Ventures and Transcend. Velocity was founded by CEO Tal Shoham alongside COO Amir Shaked and CPO Nimrod Zuta, former executives at ironSource and Unity who spent more than a decade building monetization, advertising and growth infrastructure used by developers worldwide.
Velocity
(Photo: Roei Shor)
Velocity is developing infrastructure for AI-native applications as companies face two growing challenges: rising costs of running advanced AI models and difficulty converting large numbers of free users into paying subscribers. While hundreds of millions of people use AI-powered products, including assistants, coding tools and specialized applications, only a small percentage become paying customers.
The company argues that traditional subscription models alone may not be enough and is building a monetization layer based on AI-native advertising and recommendations integrated directly into user conversations. Instead of limiting users of an AI photo-editing tool to a small number of free images before requiring payment, Velocity’s technology could allow more free usage by generating revenue from advertisements based on real-time user needs.
At the center of the platform is what Velocity calls “user intent” — the information people reveal when they interact with AI systems about what they want to learn, create, buy or solve. The company says AI conversations provide a more direct signal than traditional advertising methods based on cookies and browsing history, which are increasingly restricted by privacy regulations.
Velocity’s platform includes an AI advertising network, a mediation and auction layer designed to maximize revenue across demand sources, and a conversation intelligence system that turns AI interactions into structured, privacy-safe intent signals.
“AI is becoming the dominant interface for software, creating entirely new opportunities around monetization and distribution,” Shoham said. “We believe the biggest opportunity of the AI era will not only be building products, but also monetizing and distributing them.”
The funding round also included angel investors from the technology, gaming and advertising sectors, including Ofir Ehrlich, founder and CEO of EON; Omer Kaplan, co-founder of ironSource and CEO of Zyg; Nadav Ashkenazy, co-founder of Zyg; Gilad Almog, founder and CEO of SuperPlay; and Lior Shiff, founder and CEO of Tripledot Studios.
Investors said AI applications will require a new growth infrastructure layer as the technology becomes one of the largest technology platforms in history.
“Every major platform shift creates new infrastructure categories,” said Gigi Levy-Weiss, general partner at NFX. “We believe AI-native applications are creating one of the largest new technology platforms in history, built around real-time user intent, and Velocity is building the growth infrastructure layer that enables that intent to drive monetization, distribution and growth.”
Atad Peled, a partner at Red Dot Capital Partners, said AI-native applications are creating a major opportunity around user intent and that Velocity is building the monetization and distribution layer for the next generation of software.
Velocity said early deployments with AI companies have shown that monetization can be introduced without harming user experience, engagement or retention.
The company’s long-term vision is that intent will become the defining signal of the AI era, similar to how keywords shaped search engines and identity shaped social networks.