Pally raises $5.2M to put an AI assistant in your text messages

Pally, a Y Combinator-backed startup, has raised $5.2 million for an AI personal assistant that manages text messages. Pally is valued at $30 million, according to the company.

Cyber Fund, Y Combinator, Pioneer Fund, Founders Inc and 468 Capital led the round. Angel investors also joined. Pally launched in 2025 and wrapped up its YC stint last summer.

Haz Hubble, Pally's cofounder, pitches the product as a way to keep relationships from slipping through the cracks of modern messaging. "Relationships are the single most important thing in our lives," he told Business Insider. "We want to use technology to be better at managing those relationships, rather than having technology come in and replace these relationships."

The service works by having users text a number. An AI-generated response introduces itself as Pally, first in all lowercase because it "feels more human," Hubble said. The assistant adapts to the user's own style, so someone using Gen Z slang or shorthand gets that tone mirrored back. Pally is betting on text messaging as the way to reach users.

Integrations include Gmail, Outlook, Slack, Notion and the AI notetaker Granola. Users authorize access through links the assistant sends; for Gmail, Pally relies on a tool called Composio. A separate desktop app for Macs syncs iMessage. A dashboard then lets them manage account access, assign tasks, edit contacts and review what Pally has saved about them. Hubble said Pally encrypts data as it travels and does not sell or train models on user information.

The assistant can book flights, maintain inboxes, respond to messages and book restaurant reservations, Hubble said.

Under the hood, Pally uses Anthropic's Claude and OpenAI's ChatGPT, along with open-source models Kimi K3 and GLM 5.2. It has outsourced engineering to Claude Code, spending about $20,000 a month on Fable, one of Anthropic's coding models. Hubble described Fable as a "staff level engineer" working 24/7.

Pally previously employed staff and part-time interns. It has since trimmed the team to Hubble and cofounder Wyatt Lansford. The new funding will go toward growth and marketing, including hiring another team member, because the work requires a "human touch," Hubble said.

Y Combinator alone has backed more than 140 startups in the category, according to its website. Friend AI sells a wearable that acts as an AI companion. Town AI raised a $55 million Series A this year from A16z and Forerunner. Poke, another text-based assistant, was acquired by AI agent company Cognition. Series is building a professional networking tool that lives in text messages. Larger companies such as Microsoft, Meta, OpenAI and Anthropic are also building assistant tools.

Hubble argues that a smaller consumer-focused company can deliver a more personalized experience than those bigger players. "You should go where your users are," he said. "Put as little amount of friction between your product or the 'wow' moment and your user discovering it as possible."

Pally has a free version and a pro tier at about $25 a month that lets users sync more apps. The top tier costs $200 a month and gives the assistant its own email address and phone number. "People are ready to spend money on this when they never were four years ago," Hubble said.

Pally's latest iteration launched in June.