Gabe Newell's phrasing makes it sound like Valve is basically offering a cash advance to some developers (similar to trade publishing, where authors get an advance check which they must then "earn out" before they can receive future royalty checks).
It's basically an interest-free loan which doesn't need to be paid back if the project is a failure (i.e. fails to "earn out" its advance). Quite generous, assuming Valve isn't taking any more than their usual cut of the Steam revenue as part of the arrangements.
This is how all traditional game financing deals work and isn't anything unusual. How the recoupment on the advance on royalties is calculated is where you can usually see if the deal is generous or not. Sometimes the entity funding (in the old days it would always be a publisher like EA) would try to set recoupment terms that made it difficult to ever earn a royalty for the developer taking the advance.
As much money as Valve and HTC have put into the Vive it makes sense. The more VR games and content available = more Vive's sold. You have to spend money to make money.
It's basically an interest-free loan which doesn't need to be paid back if the project is a failure (i.e. fails to "earn out" its advance). Quite generous, assuming Valve isn't taking any more than their usual cut of the Steam revenue as part of the arrangements.