Won't YC get diluted along with the founders? That 7% will end up being less than 5% after a few rounds of VC when the founders' collective share of the company

Won't YC get diluted along with the founders? That 7% will end up being less than 5% after a few rounds of VC when the founders' collective share of the company is 40-60%. 7% for $120k is a pre-money valuation of ~$1.6M. The value of a startup is not just its present value but also includes its expected future value. If you believe that your startup is worth less than that before YC, it makes sense to sell as much as possible at that valuation. On the flip side, that is a post-money (and post-YC) valuation of over $1.7M. I think any reasonable founder would expect their startup to be worth at least $2M after going through YC - for the Rolodex and for the 3 months of heads down focus that it forces you to do.