You get the full $500k upfront. In exchange, YC gets 7% equity upfront (for the first $125k), plus a proportional share of equity in your next funding round (for the next $375k).
Most would laugh you out their office asking for 7% of equity.
I often wonder if people understand why 1:23 companies survive the startup cycle.
Best regards =)
YC isn’t about the money. The equity you give away is also for the seal of excellence it carries, and the network it brings.
I would gladly give 7% of my small company today for YC’s network and seal alone, and 10% of the money they give.
The fact is liabilities come in many forms, and small mistakes may cast a long shadow if you are a startup.
Best of luck =)