Add one angel or one early commit of 10k to it and the uncapped SAFE turns into a very bad SAFE. Basically it blocks you from flexibility of building up fundraising moment gradually.
Your problem is that the YC terms are generous, and what you are complaining about is a hypothetical where you trigger a problem by causing an early valuation. If you choose to, you get given $375k by YC, that will usually convert at the price of your future round A valuation, also the SAFE doesn’t have a discount or onerous conditions from YC (YC has zero incentive to stiff you over a measly few hundred k, from their perspective). That is far more generous than most investors who want to capture the gains between angel and round-A (e.g. the angel below who wouldn’t ever consider an uncapped SAFE, for good reasons).
If you want your angels or $10k, get them into your Cap table before YC (just like you had prior investors?). Or ask YC for an exemption, which I would expect them to give you for a reasonable request (although I admit I am just guessing).
I suspect there are many ways that you can stiff YC out of their money, because the terms are founder friendly in comparison with most VC terms? Could someone sell 5% of the company to VC_BOB for “round A” at a ridiculous overvaluation (diluting YC’s SAFE’s), then shortly afterwards sell 15% to VC_BOB for “round B” at a normal valuation?
My intuition is that YC is playing an iterated game where reputation is everything, so YC has little interest in screwing over founders (YC seems wayyy more founder friendly than most VCs). YC probably wants unethical founders to show themselves sooner, rather than waste time on them. YC is interested in the few big IPO winners - and filtering for them and investing their time in them. YC might punish highly egregiously public cases to avoid having YC look like soft touches. YC can do the uncapped SAFE because they structure everything to get the round A valuation within months at demo day (they don’t seem to care so much about their gains as an “angel”).
Generally I found the points in your article to be fairly weak, and unfairly critical, and missing important details (e.g. your founder’s over-dilution). Disappointment is expected for over 50% of YC inductees, but I don’t see that YC has been bad for you. Some cash, access to resources, a lot of learning, and the ability to try again! Disclaimer: no love for YC, I just prefer people to be fair in their judgements.
But really what matters is what outcomes have occurred? Although the only way I can think of to know that would be to ask the experiences from a few founders a few years ago that used the YC SAFE.
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If the Company issues any Subsequent Convertible Securities with terms more favorable than those of this Safe (including, without limitation, a valuation cap and/or discount) prior to termination of this Safe, the Company will promptly provide YCombinator with written notice thereof, together with a copy of such Subsequent Convertible Securities and, upon written request of YCombinator, any additional information related to such Subsequent Convertible Securities as may be reasonably requested by the Investor.
In the event YCombinator determines that the terms of the Subsequent Convertible Securities are preferable to the terms of this instrument, YCombinator will notify the Company in writing within 10 days.
Promptly after receipt of such written notice from the Investor, the Company agrees to amend and restate this instrument to be identical to the instrument(s) evidencing the Subsequent Convertible Securities.
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So, any type of issue triggers the MFN and the jackpot to YC.
I don't want to be in a situation where they never raise again and then exit for $100M five years later and I only get my small little piece with no benefit for being in early.
What does this mean in practice?
To do that, you need more money, so you ask your friend YCombinator to help you.
In return, you promise to give them a special kind of toy money that you created (like monopoly money) that they can trade for real toys later when your store becomes bigger and better.
But for now, there are no real toys to exchange yet because the shop is still small and not opened yet.
Now, if you ask other friends for help and give them even better toy money (with better chances to get more toys), you need to tell YCombinator about it.
If YCombinator thinks the new toy money is better, they can ask you to change the toy money you gave them earlier to match the better one.
You have to do this quickly after YCombinator tells you they want the better toy money.