Sure, your advice and connections are worth more than the 15K. Let's say they're worth 100 thousand. Then, you're giving away 115K in exchange for x% of the com

Sure, your advice and connections are worth more than the 15K. Let's say they're worth 100 thousand. Then, you're giving away 115K in exchange for x% of the company. x would still be negotiatable in a normal setting. Some startups are worth more than others. Ralph is right. You are providing a service for startups. Right now, you have a monopoly on that market, but eventually, other YCs will rise up, and you might have to lower the amount of equity you take. Competition. I'm not even saying that YC is being unfair. I think it's a great deal. But the "IQ test" bit reminds me of something you wrote about Viaweb: "My message to potential customers was: you'd be stupid not to sell online, and if you sell online you'd be stupid to use anyone else's software. Both statements were true, but that's not the way to convince people."