The archive · Money & Fintech · Product decision · 2026
Palus Finance's bet: startup cash should earn institutional yields
The YC W26 treasury platform plugs into a startup's existing bank and invests idle raise cash in agency bonds, targeting 4.5-5% instead of ~3.5%.
Palus Finance
What the business is
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.
How it started
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.
What happened
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.
How it ended up
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.
Background
Palus Finance was founded by Sam Lushtak and Michael Gonzalez, Caltech graduates, in Y Combinator's Winter 2026 batch. The pair entered YC with a consumer higher-yield savings product and pivoted when their own post-fundraise cash made the real problem obvious: startups park 18-24 months of runway in money market funds earning about 3.5%, while Fortune 500 treasuries actively invest in safe, higher-yielding assets.
Palus connects to a startup's existing bank via Plaid and invests idle cash in short-duration floating-rate agency mortgage-backed securities, targeting 4.5-5% returns with 1-2 day liquidity and charging a flat 0.25% annual fee. The founders argue the agency guarantee eliminates credit risk and the floating-rate structure removes interest-rate risk, so the product is a safer way to close the yield gap - on a $10M balance, 3.5% versus 5% is about $150K a year.
The company's positioning is fiduciary, not product: it signs an advisory contract, gives advice on runway and finance operations, and answers 24/7 on Slack, positioning itself against treasury dashboards bundled by Brex, Mercury and Rho. Launched to Hacker News on 2026-03-06, Palus drew 62 points and 92 comments, and a W26 Demo Day recap reports it signed 33 customers within weeks using the YC network as its launchpad.
What has to be true
- 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.
What can be applied
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.
Aftermath
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.
Sources
- Palus Finance: Your startup's financial advisor
- Launch HN: Palus Finance (YC W26): Better yields on idle cash for startups, SMBs
- YC W26 Demo Day 深度复盘：200 家公司背后的创业真相
- Palus Finance (YC W26): tesorería inteligente para startups
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