Something I've wondered: was this focus change deliberate? Or is it just a result of becoming more famous, attracting many more applicants, and accepting more mature companies since their success to date looks better?
This looks confusing if you consider YC to be an accelerator or incubator, labels which they hate. If you look at them as a seed stage investor, their shifting focus makes sense.
They give $120k for 7% of the company. Since the deal is set, the only variable, to maximize shareholder return, is the companies they accept. Since they are an investor, they're going to pick the best investments.
How do they know the "best" investment? Past history helps, so (relatively) later stage companies will have an advantage. Revenue, team, traction, etc. are all good indicators.
If you look at YC as just a seed stage VC, their actions are pretty consistent and logical.
Yes, YC has a brand and they can command this and their actions are indeed pretty consistent and logical. But it doesn't make sense from the other side of the transaction at least to me.
7% for $120k is a pre-money valuation of ~$1.6M. The value of a startup is not just its present value but also includes its expected future value. If you believe that your startup is worth less than that before YC, it makes sense to sell as much as possible at that valuation.
On the flip side, that is a post-money (and post-YC) valuation of over $1.7M. I think any reasonable founder would expect their startup to be worth at least $2M after going through YC - for the Rolodex and for the 3 months of heads down focus that it forces you to do.
It does make sense, because YC is effectively help price a round. What doesn't make sense is that most companies that go through YC are getting convertible notes from non-YC seed stage investors, while YC itself as an equivocal seed stage investor is getting equity. This is where the waters get a bit muddy.