PG is low-balling you. A 200k valuation for a startup that has already earned $1m in profits (I'd assume over several years) is absolutely ridiculous. He's trying to capitalize on his name.

I assume you're not pressed for cash. The $14k you would get by PG/YC buying in is a drop in the bucket compared to the $1m you've already earned. The main value is the YC/PG brand name.

This is not a traditional VC deal where the main benefit of the startup is cash to survive/expand. Instead, you're giving up 7% of your multi-million dollar company to get the PG stamp of approval.

Not sure what industry you are in and whether the name would be worth it. I'm leaning towards no though.

If you want to seriously consider it, get a valuation done and see how much it's actually going to cost you in lost equity. Test the waters as well with angel and VC groups.