There seems to be an increasing number of tech startups creating hardware, in what’s being dubbed by some entrepreneurs and investors as a ‘hardware renaissance’. It’s something we’ve been following with interest — the recent Australian experience seems to support the trend. Paul Graham, co-founder of the renowned Y Combinator accelerator in the US, chipped in to the discussion this week, with a blog post backing the trend. Seven out of the 84 startups in the last round of the program were hardware companies.

Russell Samuels, of Mantella Venture Partners, points to a number of companies which highlight the trend. He lists Square, a payment provider for your phone, from Twitter’s Jack Dorsey; Jawbone, which makes wearable computing; Twine, a Kickstarter success described as the ‘Swiss Army Knife of sensors’; and Surfeasy, a USB dongle that provides encrypted internet access.

It’s a trend which seems to be affecting Australian startups too. The hardware startups at the Tech23 event in Sydney last week were definitely the show-stoppers. Two of the four top prizes went to hardware startups. Enterprise hardware supplier Zeptonics won the big prize on the day, taking out the $40,000 Innovation Excellence Award. The company has developed what it claims are the fastest switching devices in the world, used in financial trading. Zeptonics was also awarded the ATP Innovation Explorer Award, which will see the co-founders spend a week in Silicon Valley, meeting with investors, potential customers and other entrepreneurs.

Or take Ninja Blocks, an Aussie startup poster-child, also on show at Tech23. It won the $20,000 Outstanding Collaboration for Innovation Award. The company produces hardware modules, called Ninja Blocks, allowing you to connect the real-world with the web. Sensors in the device detect light, sound, temperature, humidity, distance, and even current. By creating rules, you can set up alerts or actions, as a result of what’s detected. For example, you could set up an alert to your phone when someone comes to your front door.

An article in the New York Times earlier this year put the growing numbers of startups working on hardware down to a few factors: it’s cheaper to prototype now, with high-quality 3D printers affordable for startups; distribution is becoming much simpler with marketplaces like Ebay and logistics services like Shipwire; and it’s become much easier to demonstrate demand, using platforms like Kickstarter. Take Ouya, the open-source game console for television built using Google Android, which recently raised $8 million.

For the last decade, it’s been argued the tech startup industry has been dominated by software, prompting that widely quoted comment from US entrepreneur and investor Marc Andreesen that ‘software is eating the world’.

Speaking at Tech23, Mike Cannon-Brookes, of Atlassian, said Australian tech entrepreneurs need to aim a lot bigger: “build something big that will make a difference.” Maybe creating hardware will allow that to happen? It’s becoming easier and easier to get a sense of the market for these sort of products too, removing some of the risk for entrepreneurs.

There have been some big Aussie hardware successes on crowd-funding platforms. Andrew Birt, and the rest of team from Melbourne-based LIFX Labs are currently in the US, trying to figure out how to deliver on the phenomenal response to the Kickstarter campaign for their intelligent wi-fi connected LED lightbulb. They raised $1.3 million, way above their $100,000 goal.

While we’ve seen a couple hardware startups now come through programs like Startmate and the Founder Institute (co-working space Fishburners is also home to a few), it seems like we may see a lot more of them.

It’s a trend worth keeping an eye on; as Paul Graham says: “hackers love to build hardware, and customers love to buy it.” We’ll have to wait and see what that means for Australian startups.