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.

Wow people are struggling to realize that this deal is over twice as good of a deal as before (and the corollary that YC was previously lowballing).

It's not a big mystery what the SAFE valuation cap is going to be. Post-YC valuations are generally $20M+ these days, and having $500k in the bank would presumably make them higher, which means the $375k will convert to 1.875% of the company or less.

It’s twice (more than twice really) as good only at the marginal percentage ownership beyond 7%, it’s not twice as good of a deal in absolute terms. It reminds me of “buy one get one half off” - no, I’d like just one, for 25% off its list price, please. If YC revised their terms to 125K for 3.5%, that would be twice as good a deal.

Every company that applies to YC can expect to want $500k+ of capital at some point. It's extremely rare for them not to. The "no, I'd like just one" reaction doesn't make sense for a company that's aiming for a $billion+ valuation, and those are the only companies that YC accepts.

This makes sense if you wanted to sell YC 7% or more of your company. Some of us want the benefit of YC without giving up so much of our company, and the new standard deal doesn't do anything for us.