1. In the case of a sub-$100M exit, where perhaps founders are getting squeezed, every little bit of extra equity counts. YC graciously forgoes their stake in the company. That's unquestionably good.
2. In the case of a big exit, YC essentially bypasses dilution and targets a fixed post-dilution equity stake, regardless of how much subsequent investment the company took on.
That lets founders retain more equity early on and thus be that much less diluted, while still getting YC ballpark what they'd like to get in the end. So that's nice.
But how might subsequent investors feel about YC getting the same fixed percentage of a IPO'ing Series B vs. Series E stage company? Could this possibly complicate funding down the line? Is it "too good" of a deal for YC in the Series E case?
(I admit the absolute amount here is fairly low, and YC is "special" in the industry. But I'd want to sketch out the consequences in detail before taking the deal.. someone "pays" for these founder and YC benefits.)
Another (scary?) thought: might more investors demand this sort of deal down the line? Would a seed or Series A or Series B investor ask for fixed percentages of IPO/acquisitions? I can't even fathom how that would scale or complicate taking on investors.. Does this only work of it's a special one-time thing?