Without knowing the valuation that the SAFE converts at, there’s no way to tell what percentage ownership YC will get for the $375K. So to recap, what we know is they get the usual 7% for $125K, plus whatever they get from the SAFE.

You say this yourself with “That's $500k for (7% + ?) of the company.”

Bidding higher would mean more money for the same equity or less equity for the same money. That’s not what’s happening here.

To be clear, the new YC standard deal is strictly better than the old one, because you don’t have to take the SAFE. But it’s not dramatically better. For many of us the 7% for $125K remains a nonstarter.