Palus Finance's bet: startup cash should earn institutional yields

A YC W26 treasury platform for startups and SMBs: it connects to existing bank accounts, invests idle cash in short-duration floating-rate agency mortgage-backed securities targeting 4.5-5% versus roughly 3.5% for money market funds, and signs a fiduciary advisory contract rather than selling a dashboard.

That startups' idle raise cash belongs in higher-yield agency bonds managed by a fiduciary advisor plugged into their bank - $150K a year extra on a $10M balance.

Sam Lushtak and Michael Gonzalez, Caltech graduates, joined Y Combinator's Winter 2026 batch with a consumer higher-yield savings product. Once they received YC funding they realized the product they actually wanted was for their own startup cash - and founders across the batch wanted it too. So Palus Finance pivoted to treasury management for startups and SMBs.

Palus connects through Plaid to a company's existing bank account and sweeps idle cash into a short-duration floating-rate agency MBS portfolio managed by Regan Capital, which also runs MBSF, the largest floating-rate agency MBS ETF in the country. It targets 4.5-5% returns with 1-2 day liquidity and charges a flat 0.25% annual fee, arguing that agency securities carry the same government backing as the Treasuries in money market funds. Its positioning is fiduciary rather than product: Palus signs an advisory contract, is reachable 24/7 via Slack, and says Brex, Mercury and Rho cannot legally offer the financial advice it does.

Still live: as of September 2026 the two-person founding team is operating from within YC's W26 batch, having launched in March 2026 and signed its first 33 customers through the YC network within weeks of Demo Day.

The founders were their own first customers: after YC wired its standard deal, they needed the higher-yield treasury product themselves, which made the pain concrete instead of assumed.

Startup treasury incumbents were wrappers on money market funds, so a differentiated strategy - short-duration floating-rate agency MBS - gave Palus a real yield claim instead of branding.

Distribution came from the batch: YC founders all face the same post-raise cash question, so the network that YC itself provided converted into 33 customers within weeks.

A fiduciary contract turned a fintech dashboard into advice a founder can rely on, differentiating Palus from banks that legally cannot give financial advice.

Sell to the pain you just felt: Palus built the product it wanted after its own fundraise, and the batch that shared the problem became its first 33 customers.

As of September 2026 Palus Finance remains an active YC W26 company run by its two Caltech co-founders, offering treasury management with a fiduciary advisory contract and a 4.5-5% target yield on idle cash. It launched in March 2026 with early customers from inside YC and, per the W26 Demo Day recap by Rathin Shah, signed 33 companies within a few weeks. It faces established competitors such as Mercury, Brex, Arc and Meow Finance, and its thesis - that agency-backed bond portfolios are the right default for idle startup cash - remains an open bet on rates and founder trust.