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I also think it changes the game for YC participants. Part of what keeps all entrepreneurs hungry (at least early on out of necessity) is creating knowing that nothing is guaranteed at the end. Now it seems that every participant will get $150K whether their product/business is viable or not. From a competition perspective it may entice more people to apply but the bad ideas will get weeded out no matter how much money is on the table.

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It's because people know how much money to expect.

A company that requires significant physical capital investment won't bother with YC. Now they can.

For instance I bet this will produce more hardware companies like WakeMate. Companies that sell more than just software.

It's cheaper then you think to build a hardware prototype (of anything really), and 150K is hardly enough to have a decent first manufacturing run of a brand new hardware product.

I don't think this significantly impacts the hardware/software equation at all.

What about being able to produce a small batch to give to beta testers and iterate? It's possible that the extra money will allow you to better explore things at the prototype stage.

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