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Biotech, Nuclear Energy Startups Crash Y Combinator Demo Day

Y Combinator expands into new industries to find diamonds in the rough.

Lauren Goode / Re/code

When Y Combinator co-founder Paul Graham passed the keys of his uber-successful seed accelerator program to Sam Altman in February, he did so with an eye on the future.

Graham, who founded Y Combinator back in 2005, saw something progressive in Altman, a YC alum himself with plans to increase YC’s diversity and expand into industries others were actively avoiding. “The main thing I want for Y Combinator is for it to persist as long as it can,” Graham told Re/codein March. “I feel like I’m sort of unleashing Sam on the world.”

Altman’s first class of startups graduated from the program on Tuesday, commemorating their time at Y Combinator with a brief two-and-a-half-minute pitch to a room stuffed full of investors and journalists. Included in the class of 75 startups was a smaller group — seven startups in total — from industries foreign to YC classes of days past: Nuclear energy and biotech.

In other words, these startups have Altman’s fingerprints all over them.

“I’ve always loved it when we can fund companies that, if we don’t fund them, they won’t exist,” Altman said in an interview with Re/code on Tuesday. “No one is funding energy, and I think it’s a good business and really important for the world.

“I think with biotech, we’ve seen the cost and the [product] cycle-time come down enough that we should have an explosion of these startups doing amazing things.”

Included in the nuclear energy group is UPower, a Boston-based nuclear fission company that is building a new kind of reactor that “operates on natural forces.”

“Our target demographic is people off the grid,” says Jacob DeWitte, UPower CEO and co-founder. “Think of remote communities in the Northern Arctic or Canada. All of these places that aren’t connected to large continental grids rely on diesel generators for energy. … We can bring them power in a small package and get them energy they couldn’t have before.”

DeWitte showed us the fuel that powers his nuclear reactor — a Pixie-stick-like metal rod that he says “costs fifty cents on Amazon” and has enough energy to power a single home for six weeks.

Helion Energy is a nuclear fusion company (not fission) that pitched at Tuesday’s Demo Day. Dr. David Kirtley, a PhD and NASA fellow who now runs the Redmond-based company, acknowledged in his pitch the difficulties his team faces in this particular space.

“Fusion is fundamentally safe. There’s no chance of meltdown, no carbon dioxide. But at the same time, it’s really hard.” The crowd chuckled. “It’s really hard,” Dr. Kirtley repeated.

So why bet on a nuclear power company now? Kirtley says that before now, the pure magnetic compression needed to heat fusion fuel and generate energy has been too complex. It’s only in the past three years that the commercial technology to do this has become available.

In the area of biotech, a personalized medicine company called uBiome wants to offer data and insight into the bacteria that swarm our bodies, much in the way personal genomics companies analyze our DNA.

Glowing Plant, another startup in the biotech space, is focused on the genetically modified plant market, making “living air fresheners that don’t need chemical replacement cartridges, real cow’s milk without the need for dairy farming, and the ability to turn plants into useful fuel.” (This particular pitch was greeted with uneasy quiet from the packed room, as the debate rages on over the ethics and safety of genetically modified organisms.)

The new industries represent a subtle, yet promising, transition for Y Combinator. Altman says that there will be more biotech and nuclear companies to follow, but that he understands funding could be an issue. Some investors are still spooked after a series of green tech and clean energy flops, he said. Restoring confidence in these industries won’t happen overnight. “I do think they’ll all have a harder time fundraising than pure-play software companies,” he admitted.

That obstacle won’t scare Altman off. In fact, it might benefit him — and Y Combinator — in the long run.

“We’re in the business of funding huge companies, and we’re taking a very broad look at what that means,” he said. “We want the things that look like bad ideas but are in fact good ideas. That’s how you get these crazy outside wins.”

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