The State of Startups in 2026

Diana says hard tech rose from 8% to 20% of companies accepted over the last 18 months. Robotics, manufacturing, defense, semiconductors, photonics, and power all grew, with several categories reaching roughly three to five times their earlier share. Jared adds that one in six founders in the Summer 2026 batch has a PhD, while AI coding tools are reducing some software engineering bottlenecks for hardware startups.

The speakers point to space, defense, and AI compute as forces behind the rise in companies building physical products and infrastructure. Examples include satellite power and connectivity, defense startups such as Icarus and Nine Mothers, and Nox Metals, which is rebuilding metal manufacturing in Detroit. They also describe startups building data centers, chips, and optical networking equipment as demand for compute outpaces supply.

The speakers argue that SaaS remains valuable when it keeps its data advantage and becomes a place where people or agents complete work. YC’s share of accepted companies building end-to-end products rose from 10% to more than 25%, and median monthly revenue at the end of a batch rose from about $8,000 to $20,000. Juicebox is an example: its recruiting agent searches for candidates, contacts them, and schedules interviews, with the company expecting revenue per account to double or triple.

YC has funded more than a dozen companies in the last two years that each make over $10 million annually selling data or reinforcement learning environments to AI labs; some reportedly make hundreds of millions. The speakers describe demand for specialized data, including real-world robotics tasks, and suggest that companies with proprietary data may fine-tune open models for specific uses. They note that robotics models often need customization for a particular environment and must respond in real time.

YC’s solo-founder share rose from about 5% to roughly 18% or 19%, which the speakers link to AI tools making it easier for one person to build and sell a product. They also see experienced founders doing well because they bring product judgment and experience managing teams, skills that can transfer to directing coding agents. Their advice to aspiring founders is to start building and revisit problems that improved models may now be able to solve.