My impression is that they arrived at that based on what it would take young people to live frugally in the area until they built their product and got funding.

My impression is that they arrived at that based on what it would take young people to live frugally in the area until they built their product and got funding. They have a very large pool of applicants to choose from even with the small amounts the invest. I think if they decided that they needed to increase the size of the talent pool to get enough quality groups, they would look into ways (such as increasing the investment amount). As it is, they don't seem to need to, so why would they?