Agreed situation is the worst on the first round that involves a VC. It can also arise in later rounds if you take strategics or new VCs. Given that most YC co

Agreed situation is the worst on the first round that involves a VC. It can also arise in later rounds if you take strategics or new VCs. Given that most YC companies will still go on to raise a seed angel round after this 150k, they will be hit by extra pro-rata dilution. If we assume a $5m seed round post money, then the 150k translates to 3%. If you raise a VC round with a VC that insists on a 20% stake then the overall affect is 0.6% extra dilution. Every point hurts at that stage, but not that bad :).