Couple reasons: first off YC is easily worth the value in just the introductions alone. Personally I'm about to start contacting angels/seed funds and its going

Couple reasons: first off YC is easily worth the value in just the introductions alone. Personally I'm about to start contacting angels/seed funds and its going to be a pain in the ass. When you combine the increased valuation in later rounds due to their being part of the group. I'd give up 7% any day of the week, easily making it back in during the seed round. Don't have direct knowledge of this, but I'd bet that before last year most of the companies weren't even organized (or organized correctly) when they joined the program. When forming the company YC took their equity in the process of filing the paperwork. Also think about it on the financial side when they started: investment + time of team + misc = ~$40,000 per company At the beginning, as an untested concept that was quite a risk. They've just kept their rate flat from when they started, while adding quite a lot more in value. Aa a wise and very wealthy man once told me: "An idea is worth exactly... zero..."