When Y combinator started the amount of money was also ridicule.
What you get with his funding is visibility and this is rapidly growing in value because everybody will now look with high curiosity what are the 6 selected projects.
It looks like he is attempting to undercut Y combinator and might succeed. Look how he targets a niche market that is discarded by Y combinator : single founder projet. He applies all the advises given by PG himself.
I'm looking forward to see how he will execute, but this is already a very good start.
If I had a close to finished project and no traction because of no visibility I would apply. Because the visibility will be much bigger than with an article in techcruch.