Lava Raises $5.8M for Digital Wallets in Agent-Native Economy

Lava Payments Launches to Simplify AI Agent Transactions

A newly established startup, Lava Payments, is challenging established payment processing companies by developing a solution tailored for the evolving landscape of the modern web. This new system is designed to facilitate transactions handled by artificial intelligence (AI) agents on behalf of their users.

Origins and Founder's Vision

The concept for Lava Payments originated with founder Mitchell Jones following his departure from Lendtable, a previous fintech startup supported by Y Combinator. His subsequent experimentation with AI technologies revealed a significant opportunity.

Jones observed the need for a more streamlined and developer-friendly system for utilizing AI and agent-based payments. During an attempt to create a seemingly simple AI application, he unexpectedly incurred over $400 in expenses while constructing a fundamental form-filling agent.

“A recurring problem became apparent,” Jones explained to TechCrunch. “I repeatedly found myself utilizing the same core models and tools, but accessed through various interfaces or platforms.” Each instance necessitated a new subscription, re-authentication, and separate payment, “despite already having paid for access to the underlying model itself.”

“This felt inherently inefficient,” he continued. “The desire wasn’t to repeatedly purchase access to the same resources under different guises. Instead, a unified wallet, a single pool of credits, and seamless interoperability between tools and providers were needed, eliminating the need to restart the process with each transaction and allowing payment only for actual usage.”

This realization prompted the launch of Lava Payments.

How Lava Payments Works

Lava Payments functions as a digital wallet, enabling merchants to leverage usage credits for transaction processing. The core idea is that a unified credit system, applicable across multiple merchants and services, simplifies payments for autonomous agents without requiring human oversight.

Here’s how it operates: Merchants can integrate the Lava wallet for customer use and deposit funds (in the form of credits). Customers can then utilize these credits at any merchant accepting Lava, as well as access foundational models like GPT and Claude on a pay-as-you-go basis, according to Jones.

Instead of individual payments for each tool, users acquire a single usage credit that AI agents can automatically deduct as they complete tasks. This eliminates the need for constant user approval of each transaction.

“Without Lava, agents encounter obstacles navigating the internet due to persistent payment barriers,” Jones stated. He illustrated this with Google Maps, noting that users don’t pay Google for each map view, having already covered internet access through providers like Verizon and AT&T.

Funding and Competitive Landscape

On Wednesday, the startup announced the successful completion of a $5.8 million seed funding round, spearheaded by Lerer Hippeau.

Other companies operating in this space include Metronome.

“Our vision centers on a highly interconnected world,” Jones emphasized, highlighting what differentiates his product. “We are dedicated to building for the agent-native economy.”

Founder's Background and Future Plans

Mitchell Jones, raised in a working-class family in Dayton, Ohio, credits his upbringing with instilling the values of hard work, financial prudence, and education.

“These are principles commonly shared,” he recalled during his conversation with TechCrunch.

Jones pursued a strong educational path (Yale University) and gained experience at prominent companies (Goldman Sachs, Meta) before venturing into entrepreneurship with fintech startups Parable and Lendtable (the latter being a YC S20 participant).

His connection to Lerer Hippeau stems from a high school acquaintance with Will McKelvey, now an investor at the firm. McKelvey had been following Jones’s career and expressed a long-held desire to collaborate, ultimately leading to investment in Lava Payments.

Additional investors in the round included Harlem Capital, Streamlined Ventures, and Westbound. The newly acquired capital will be allocated to talent acquisition, product development, and the implementation of go-to-market strategies.

Jones envisions Lava Payments as the “underlying infrastructure powering the AI web,” particularly as AI agents become increasingly prevalent in online transactions.

“Our goal is to empower agents to navigate, transact, and innovate without encountering friction,” he said. “We aim to ensure that AI is accessible to everyone, including individuals like myself, from Dayton.”

Note: The original article's title was revised to accurately reflect the company’s core function.