In a sign of super-sized seed times, Y Combinator will now invest half a million dollars in every startup accepted into its program, it announced Monday. The famed startup accelerator had previously invested $125,000 in exchange for 7% of a startup as part of the terms of going through its program. Now it will be adding an additional $375,000, for a total of $500,000 for each company.
The idea is to give founders more upfront cash in the hopes "it will remove the immediate pressure to fundraise and accept less than favorable terms," Y Combinator said in its announcement. The extra $375,000 will be part of an uncapped SAFE with "most favored nation" status — in other words, it will enjoy the favorable terms offered to any subsequent investor, a safeguard often sought by early backers.