Despite his mistaking equity for revenue, he essentially summarizes decision you make any time you take any money, which is that you give up something for it. With Y Combinator, you do it at a lower price than you would a normal angel or VC round, but you also do it at an earlier stage and you get more value add for it. That’s clearly the standard in investing. Earlier stage = higher risk = lower valuations.
So it’s an exercise for the startup to determine if it’s worth it. What shocks me about a lot of the coverage about Y Combinator is that people seem to think that this is any different than any other investment round. It isn’t. It’s the same decision a startup essentially makes every day. They also seem to think the 6% average for the somewhere over $15k they get on average (making the valuation in excess of a quarter million) is a noteworthy amount. Maybe it’s my own naivety, but when I was in that position, my thought was something like “these guys are giving me a valuation of over $300k and we didn’t even have a PowerPoint to show them.”
