We're bootstrapped, and we did it last year. I wrote about our experience: https://canny.io/blog/what-youll-get-out-of-y-combinators-st...

I would guess that this is YC's version of freemium. They're giving away a slimmed down version of their product for free, to drive brand awareness / resonance, and attract more qualified leads to their paid (7%) program.

You might not be interested in YC proper, but there's still plenty of great advice, that will probably translate into you having a more successful startup.