New startup LAVA Payments aims to take on the payment giant by building modern web solutions for AI agents to handle customer transactions. The idea came to founder Mitchell Jones after he left LendTable, a fintech startup supported by former Y-combinators, when he began experimenting with AI.
He considered the possibility of using AI and agent payments to build a simpler, developer-friendly system. While trying out the AI app and trying to build what he thought was simple, he quickly spent over $400 trying to build a basic form filling agent.
“I kept running into the same problem,” he told TechCrunch. “I used the same underlying model and tools over and over, but through various wrappers and platforms,” and each time he had to start a new subscription, re-authenticate, and pay separately “even though I had already paid for access to the core model.”
“It felt fundamentally broken,” he continued. “I didn’t want to blame for accessing the same thing under another wrapper. What I wanted was the ability to move between tools and providers without having to interact with each time so that I could pay for a single wallet, a set of credits and what I was using.”
He decides to start paying for the lava as a solution.
LAVA is a digital wallet that allows merchants to use usage credits to make transactions easier.
The idea is that a set of credits working across merchants and services makes payments easier for autonomous agents without the need for human intervention. This works like this: Merchants can allow customers to upload using (credit) money. When the customer does it, they can take that money and use it with merchants who accept that they will “pay you as you go,” either of the underlying models like lava or GPT or Claude, Jones said.
So, rather than requiring payment for each tool, users will purchase one-time usage credits that AI agents can simply charge when performing various tasks. You no longer ask users to approve post-transaction transactions.
“Without lava, agents can’t move the internet smoothly because they’re constantly blocked when it’s time to pay,” he said. He uses Google as an example and says that every time a person opens Google Maps, they already pay AT&T to access the internet to Verizon and AT&T, so they don’t need to pay Google for that map.
On Wednesday, the startup announced a $5.8 million seed round led by Lerer Hippeau.
Others in this field include startups like metronomes.
“We consider the world to be very interconnected,” Jones said of making his product different. “What we’re really focused on is building an agent-native economy.”
Born into a working family in Dayton, Ohio, Jones said his parents always told him the best way to go ahead is to work hard, save money and get a good education.
“You know, a lot of what most people say when I talk to TechCrunch.
Jones took that advice to heart. He got a good education (Yael), had some good work (Goldman, Meta), and then founded several companies (Fintech parables and Lendtables, the latter of which was YC S20).
Jones said he met the lead investor at LAVA as he attended high school with Will McKelvey, a now Lerer Hippeau investor. He said McKelby has been following his career for a while and would like to work together one day, and that was the payment for the lava.
Others in the round included Harlem’s capital, streamlined ventures and westbound. The fresh capital is used to develop employment, product construction and migration strategies to the market.
Overall, Jones is ready for lava to become “an invisible layer that powers the AI Web.”
“We need to allow agents to move, trade and build without friction,” he said.
“We want to make sure that AI is something that everyone can use, even for Dayton kids like me.”
The title of this work has been updated to properly reflect what the company is doing.
