The State of Startups in 2026

Garry (0:00)

Frankly, some of the most powerful and badass founders that we've been seeing lately, there might be in their late 30s, 40s, even 50s. I mean, there's a sort of resurgence of the experienced founder. A lot of people seem to say that they want to be YC for solo founders, but it turns out YC is the YC for solo founders. What a weird moment we are in history where you wake up in the morning, you like wire up a new model, and then these things that even a month ago, you're just like, why isn't it working? It just starts working.

Welcome back to another episode of The Lightcone. At YC, we work with thousands of founders per year, which means we start to see things before they're obvious. So we wanted to share some of that with you today. What's the state of the art, and what's coming next? What should you, the builder, know?

Let's get started. Diana, you have a few things to share with us.

Diana (1:05)

So we did a bit of an analysis for all the companies we accepted in the last 18-12 months, and we have some pretty shocking stats to share with everyone. So one of the big ones is the number of hard tech companies that are in the bat. It has gone from 8 percent to 20 percent. There's a lot of underlying reasons why that has happened. We will go deeper into that. The other one is the rate of growth of companies and what YC does to the companies has accelerated. So the median YC company, when it gets accepted, is at zero in revenue. It's pre-revenue, pre-product.

By the end of the batch, in the past, companies would get about 8K median revenue. Now, the companies in median are getting to 20,000 monthly revenue as opposed to 8K. So those are the top two that we can dive deeper into.

Jared (2:02)

Yeah. Let's dig into hard tech first. What are these hard tech companies and what's driving this?

Garry (2:08)

Things that actually touch atoms and not just bits.

Jared (2:10)

Yeah. I think you have the category breakdown of the hard tech companies, right Diana?

Diana (2:16)

Yeah. So specifically, robotics has been a big one. It has gone from 1% of the batch to about 6, 7% of the batch. Industrial manufacturing, building things back in the US has been a huge trend.

It has gone from about 4% to 10% of the batch. The other one is defense is a big one. We all have been working with a lot of defense startup. It has gone from about 1.5% to about 5% of the batch.

The other big one is there's this compute need that the world is getting into with AI. There's a lot of companies building the semiconductor stack or photonics. It has gone from about 1% of the batch from a year ago to about close to 4% of the batch. The other one even below the stack of compute is power. There's a lot of power infrastructure as well. It has gone from also 1% to about close to 3% of the batch. All these numbers across the physical atom stacks have somewhere tripled or quintupled.

Garry (3:15)

Yeah, this is the age of the machine, I think. I mean, as the world goes, our motto, the T-shirt says, make something people want, and people sure do want those things right now.

Diana (3:28)

And the other interesting factor about all these companies that are going deep into atoms is that we've been funding more technical founders with more expertise than ever. Right, Jared? We have this fun stat about the current summer batch.

Jared (3:45)

In the current summer batch, one in six of the founders actually has a PhD. It's way more than that's been historically. And it's because, yeah, if you're doing something with silicon photonics, you're probably going to need a pretty strong research background.

And so we've been funding a lot more of those founders. And those founders, I think, have disproportionately been doing especially well.

Garry (4:05)

I think AGI compounds this in a really fascinating and awesome way. And you might think in the past, you actually... like, hard tech was hard because you had supply chains, you had an incredible software component often.

I think Palmer Lucky talked about this a lot when it came to Andriil. It's like, having code gen means that suddenly, even all the things that they do at Andriil can happen much, much faster, right? Even three or four years ago, you would talk about software engineering and like the top tier software engineers as one of the limiting reagents to being able to do really, really top tier full stack hardware. And that's less and less true. I mean, you still need one or two of them, or you need like a small team, but you don't need to hire a thousand great engineers versus Google or Meta or whoever else. And that really changes the economics.