The big question is whether this leads to better overall outcomes.
If the company fails, or is aquihired by the skin of its teeth, it doesn't matter which terms the various rounds offered when.
YC is perceived as offering a greater chance of success, a combination of being plugged into a large network of alumni and having the halo effect which comes from getting into a cohort.
As long as that perception is there, founders will keep taking the deal. If that perception is accurate, then they're smart to: and the terms aren't worse than any normal VC would offer, they're better.
So there's a lot riding on that being true, which I have no special insight into. Having to guess, I suspect it's less true than it used to be.
The terms are worse in the sense that they're at a much lower valuation than most VCs would offer, not that it wasn't a good deal for the startup. Almost every YC alumni I've talked to believes it was worth it.
If the company fails, or is aquihired by the skin of its teeth, it doesn't matter which terms the various rounds offered when.
YC is perceived as offering a greater chance of success, a combination of being plugged into a large network of alumni and having the halo effect which comes from getting into a cohort.
As long as that perception is there, founders will keep taking the deal. If that perception is accurate, then they're smart to: and the terms aren't worse than any normal VC would offer, they're better.
So there's a lot riding on that being true, which I have no special insight into. Having to guess, I suspect it's less true than it used to be.