HN

Comments (83)

• Menu

  random3
  Good luck! Fintechs targeting SMBs is a go-to-market strategy template that makes sense until you go to market and realize that if you have a better product, there's a better, bigger market and that market is the mid-market...The thing with startups, like with SMBs is that most times are fragile, not-financially sound institutions. At least for startups, those that don't die, usually grow and need the larger scale features anyways.
• Menu

  pfannkuchen
  Juvenile concern: Your name is an extremely short edit distance from the word phallus [1] and essentially it is “phallus” but it starts with a different sound. Or I guess you could say it rhymes except for the first sound, which put that way doesn’t sound as dramatic, but the words rhyme across multiple syllables and for a majority of the word, which again does sound somewhat dramatic.Does this simply not matter? I assume someone noticed this at some point during the naming process and it was set aside as an impractical concern.Anecdotally, it seems like most companies try to avoid such names. For example I can’t think of any company names that end in “agina”, with the notable near exception of Orangina, which I think actually comes from it being a brand name from outside the Anglo sphere so they didn’t choose that name in English going in.So is this like naming a company Pagina? Lagina? Bagina? Dagina? Zagina? Or, since it is a secondary word perhaps more like Fabia, or Tabia? Which doesn’t actually sound too weird, though that other secondary anatomy word is not used nearly as often, whereas for example “phallus like object” is a household phrase.Can someone comment? My curiosity is… aroused.[1] https://en.wikipedia.org/wiki/Phallus
• jimnotgym
  Just writing this for normal business people who don't have time or space to understand risk in money markets...If you have a surplus of cash you won't need for a few months, ask your bank manager for rates on a 30 day deposit account. You might be suprised how much better that is than doing nothing, for little risk or time. The last one I set up was done via email with the relationship manager, it appeared in my online banking the next day.Now decide if your time is better spent developing your business or understanding money market risk
• naturalauction
  In my mind, the ideal product would be an account that invest 100% of my assets in funds of my choice - and has immediate liquidity.One solution could let me withdraw immediately but and retroactively deducts the last few days of returns (or target a withdrawal fee equivalent to said returns).Do you know if there’s a regulatory reason this product doesn’t exist?
• Menu

  quickthrowman
  You’re still exposing yourself to duration risk, right? What’s the average duration of your short-term MBS portfolio?MBS bonds pay a risk premium for a reason, you’re virtually free of credit risk, but you’re assuming interest rate/duration risk (not particularly relevant if duration is low, I’m not familiar with the duration of short term floating rate MBSes)Also, what happens in a Silicon Valley bank type scenario, let’s say you have lots of withdrawals and you have to liquidate at under face value. Who eats the loss?
• Menu

  blainehoyt
  I like that your app is simple (a number that goes up). It would be cool for you to put this directly on your home page for potential customers to plug their number in and see the rate in which it goes up. I had Claude mock it up here [1][1] https://claude.ai/artifacts/32bf6312-22b2-4d34-9840-bf33718f...
• Menu

  tjpd
  Isn't the issue of products like this that they present PHC risk, jeopardize QSBS - particularly at the earliest stages where revenue is de minimis?
• Menu

  mushufasa
  I spent time looking into this a couple years ago as a startup founder with this problem. We are in the finance space so I saw how bad the treasury options were with our bank, given their fee cut versus plain T-bonds at the time. I looked into which brokerages allowed us to setup self-directed accounts (many banks don't offer that for businesses at all). I found the "correct" approach. But then there would be more paperwork and back and forth to set up that new account, then manage transferring money around when we needed it, logging into a different system. On a ski trip a friend in finance told me "you're being dumb, if your bank offers you a treasury plan with a one click button, even if it's not perfect, click that button now!" So I did.Then, the benefit of saving 1-2% extra versus spending my time trying to actually running the business and doing things with our money in the real world, has meant I have never looked back. 1-2% on millions of dollars is significant but it's not nearly as impactful as finding Product-Market-Fit in your actual business.All this to say: I'd be in your target market but I'm simply not interested in a "marginally better" treasury system versus just going with my bank's options that make it easy for me.
• Menu

  yarrowy
  What's the advantage of this versus opening a Fidelity account and buying the same product?
• Menu

  vicchenai
  We kept all our post-seed cash in a basic MMF for like a year before realizing how much yield we were leaving on the table. Honestly the hardest part wasn't finding better options, it was convincing our board that slightly less liquid != risky. Curious how you handle the liquidity communication with founders who might need to pull funds on short notice.
• Menu

  collingreen
  Startup founder: at this point you need to overcome the stigma of fly by night fintech wrappers sitting on top of banking and the exceptional, outsized risk that creates for consumers a la synchrony and things like yotta essentially losing millions of customer money with no recourse because a discrepancy between those two layers. 1% higher yield is nowhere near juicy enough for me to literally bet the company on and that's close to what would happen if you lost my entire last round (or locked it up 6 months beyond when I need it). Starting with yc companies as a trust indicator is helpful although yc switching to a shotgun "fund hundreds of companies per batch" approach means the yc label carries a LOT less weight than it used to (since they are no longer paying much attention to any one investment).I like smart finance plays and I hope you can do that and stand out from the glut of finance bros who have (and continue to) muddied the water (poisoned the well?) with this approach of "tech on top if actual finance companies".Good luck out there!
• Menu

  SigmundA
  Nice to have some higher yield options.There are banks out there that will do business savings accounts not much below this (2.85%) while keeping things safe (FDIC insured) and liquid.https://www.liveoak.bank/business-savings/
• anon
  undefined
• Menu

  notpushkin
  Congrats on the launch!Do you work with non-US companies? I have a company in Estonia, and hold some reserve cash (mix of dollars and euro) on a Wise account. It pays 2.20% variable APR, but I’m starting to explore other options :-)
• Menu

  zie
  At .49% expense ratio, plus whatever your cut is, it won't be a very cheap product. Even SPAXX, the default holding of cash at Fidelity is cheaper at .42% ER.There is no free lunch in investing, so that extra yield comes with extra risk. Be that duration, credit, etc. That's not to say MBS's don't have their place, but I would never claim people's mortgages as equivalent to cash in any shape or form. Your website claims MBSF is safe for 3+ month durations, but that is not the avg duration of MBSF held securities, so you are encouraging duration risk.I haven't read the full prospectus on MBSF, so I'm not an expert on that product, but it seems expensive and complicated, which is not what you want for cash and cash-like things. This should be a hard pass for literally everyone.Meanwhile you can hold something like ICSH[0] or SGOV[1] with expense in the .09% or lower range(i.e. for every $10k we are talking $9/yr or less in fees). SGOV is 0-3 month max duration, so it's perfect for holdings in the 3 month time-frame. If you need longer time frames you can buy govt bond ladders in whatever time frame you want.What your product should have been: You specify duration for each of your buckets, and then you pick appropriate, cheap index-based investments that are cheap and easy to reason about for each of the buckets.0: https://www.ishares.com/us/products/258806/ishares-liquidity... 1: https://www.ishares.com/us/products/314116/ishares-0-3-month...
• Menu

  kristianp
  > Agency MBS holders suffered no credit losses during the crisis, and post-2008 underwriting standards became even stricter.I suppose the Agency MBS holders still had losses during the GFC. Would your clients wear any losses in MBS price of there's another housing downtuurn or recession? Why not diversify into other bonds as well?
• Menu

  sebmellen
  How do you compare to a group like https://crescent.finance? Disclosure: I am an investor in Crescent, but primarily I’m just curious!
• Menu

  uniclaude
  Far from me the idea of criticizing a founder starting something to help other startups. That's amazing. However, the post is not really accurate! Are you sure that all these MBS pools have the same government backing as Treasuries? Ginnie Mae, Fannie Mae, and Freddie Mac are not equal. Are the additional risks (spread risk, liquidity mismatch, and risks related to the mortgage structure that even Regan discloses!) worth the tiny extra yield above money market funds? Startups have to deal with uncertainty all the time, that's the nature of business. Principal loss, and liquidity issues are not things you should have to deal with as a startup. However, providing options to startups is always great, and I think this is a great direction!Again, I hope this doesn't come as negative, but I'm not sure this is making the risk clear. I am not sure I would suggest my portfolio companies to risk their treasuries unless I am sure they're fully understanding the risks associated. Do you intend to provide anything else?
• Menu

  _hugerobots_
  This would be a really nice product to start ups outside the US tech belt. Hubris of treading water in longterm a-series SUs elsewhere, this could be a viable solution if accessible.
• Menu

  hahahacorn
  Is this available for Non Profits?I've had an easy time setting up treasury accounts with Rho & Mercury for 2 co's, but the latter gave me a no-go on an account for a non profit.
• Menu

  kjksf
  Anyone can buy STRC with 10-11% yield, paid monthly. Full liquidity (i.e. can sell anytime).5% return is not competitive.
• sethherr
  I’ve wanted this produce for years. Signed up. Thank you.
• anon
  undefined
• Menu

  amluto
  Is the income generated exempt from state taxes?
• anon
  undefined
• Menu

  andrewljohnson
  We use Mercury’s treasury account to get yields on cash, and what appeals to me is it is easy to manage. I don’t have to worry about setting up processes to move money around and it’s integrated with my bank account, and we wouldn’t want to switch even for a higher yield… the operational burden is more important to us than yield.I think the yield is about 3.2% based on how we set it up to be as liquid as possible. We could have accepted less liquidity for more like 3.8%
• petesergeant
  It seems odd that the startup is getting the yield here, not the investors
• Menu

  jdndbdjsj
  Good luck! Not being startupy or American I don't understand. But sounds like a schlep problem (see pg essays).If you ever want to pivot an idea I am suprised no one does is why don't long term bets e.g. 2028 president pay interest. When you bet on something almost certain in 5 years you always lose due to lost interest. Maybe bets can include interest or even be chucked in SP500 for duration.
• Menu

  Lionga
  Any higher yield comes from higher risk. If any startup feels the startup is not risky enough and really wants to have higher yield for higher risk just put the money in a Bond ETF that suits your risk appetite. Crazy that YC funds things that make a simple thing more complex and more costly for zero upside.
• Menu

  TZubiri
  If the value proposition is better interest rates, it sounds like Palus would get that by giving up their cut, what would be your monetization strategy then?
• skeptic_ai
  Nobody passes this through an llm ? They seem a bit sketchy—-*TL;DR* Palus Finance is offering a legitimate corporate treasury strategy, but their marketing relies on severe misdirection. They are pitching a floating-rate Mortgage-Backed Securities (MBS) portfolio as a direct replacement for a Money Market Fund (MMF). They achieve this by intentionally conflating liquidity (the time it takes to sell an asset) with price stability (getting 100% of your principal back). Furthermore, they are currently acting as a middleman, charging a 0.25% fee to put user funds into a publicly traded ETF (MBSF) while using a smoothed-out UI to hide the ETF's daily price volatility.Here is an analysis of the structural risks and marketing sleight of hand in the Palus Finance pitch.### 1. Conflating "Liquidity" with "Principal Stability"The most dangerous misdirection in their marketing is placing "One business day" liquidity in a direct comparison table alongside a Money Market Fund and a standard Bank Account.* *The Illusion:* This framing implies that if a startup deposits $1M, they can request a withdrawal and receive exactly $1M plus accrued interest the next day, with zero friction. * *The Reality:* "Liquidity" in this context strictly means the asset can be sold on the open market in one day. It provides absolutely no guarantee regarding the price of the asset at the time of sale. Money Market Funds are structurally designed to aggressively defend a stable $1.00 Net Asset Value (NAV). Palus does not offer a stable NAV. Because the underlying assets are floating-rate bonds, their price fluctuates daily based on credit spreads and macro-economic factors. If a startup suddenly needs cash during a market stress event, they will get their money in one day, but they will be forced to sell their bonds at a loss, taking a haircut on their principal.### 2. The "Government-Backed" Halo EffectPalus leans heavily on the phrase "federally guaranteed," comparing the safety of their mortgage bonds to the US Treasuries held inside a standard MMF.* *The Illusion:* It creates a halo effect, making the investor feel like the entire investment is immune to losing money, much like an FDIC-insured account. * *The Reality:* The federal agency guarantee (Fannie Mae, Freddie Mac, Ginnie Mae) only protects against credit default—meaning if the underlying homeowners stop paying their mortgages, the government makes the bondholder whole. It provides zero protection against price volatility. Palus is using a guarantee against a very rare event (homeowner default) to distract from a very common event (the daily market price of the bond dropping due to widening credit spreads).### 3. The UI Sleight of HandIn their Hacker News post, the founders openly admit their design philosophy: "Our goal was to create the simplest possible UX for this product: two buttons and a giant number that goes up."This is the mechanical core of the misdirection. The underlying asset they are using does not just "go up." It is a traded security that experiences daily mark-to-market price action. By building a dashboard that abstracts away the actual charts and only shows a smoothed-out, ever-increasing balance, Palus is visually tricking users into treating a fluctuating bond portfolio like an accrual savings account.### 4. The "Secret" Asset and Fee LayeringThe HN post reveals that Palus is currently executing this strategy by simply buying *MBSF*, the Regan Capital Floating Rate Agency MBS ETF.This strips away the illusion of a bespoke corporate treasury product. Palus is taking your cash and buying a publicly traded ETF that anyone can purchase in a standard brokerage account.* *The Catch:* The extra 1.0% to 1.5% yield they advertise is heavily squeezed by fee layering. Users are implicitly paying Regan Capital’s expense ratio for managing the ETF (currently 0.49%), and Palus is charging an additional 0.25% AUM fee on top of that just for providing the UI wrapper.### The Final VerdictPalus is wrapping a real, institutional-grade fixed-income strategy in the reassuring, risk-free language of a neobank.If a startup is managing a large pool of capital and knows they will not touch a specific tranche for 12 to 24 months, capturing the yield spread on floating-rate agency MBS is mathematically sound. However, marketing this as a slightly slower Money Market Fund is a trap. Any founder using this for short-term operational reserves is taking on hidden price volatility that could force them to lock in capital losses exactly when they need runway the most.
• Menu

  I_am_tiberius
  Did YC finally stop investing in AI companies only?
• Menu

  d--b
  Dude, don't put safe and high-yielding next to each other. It makes your post look like a scam.1% spread is in fact, pretty small, so yeah, it probably isn't very risky.