Because angel investing is a numbers game, and extending funding beyond those who traditionally have access to it has always been YC's edge (whether or not they saw it as such). You can fund 1,000 companies for 30k and if one becomes Uber [3] and all the others fail your 7% stake might be worth as much as 145x your initial investment. 30 million is only a half dozen Yahoo parties, many countries have wasted multiples of that on fancy "entrepreneurship encouraging" offices.

When Georges Doriot financed DEC in 1957 [1], he got 70% for his $70,000 ($600,000 in 2016 [2]). These were proven scientists with a track record of successful research. It was considered a landmark deal because it was not blue chip, and the founders were not connected. How many smart people languished in corporate or government labs instead of starting another DEC or Microsoft? What was the opportunity cost of the lack of capital availability?

Then you have YC v1.0, which invested $20k for 7%... which we easily forget today was a non-controlling stake, and thus groundbreaking (or at least trend-setting). YC set the terms for the rest of the world to follow (slowly - I still meet, here in Singapore, angels who want complete control from the seed round onwards). Founders could actually still control their company after taking outside money!

Of course there were the ancillary benefits of the network and so on, but to me the really groundbreaking idea was also that significant expansion of the number of companies that could get funded. Working class scholar at MIT whose daddy doesn't know Tim Draper? No worries, you just need to fill in the form, YC will get in touch.

Competition, and inflation (both general inflation, and of opportunity cost from the two tech booms) drove that up to $120k, still for 7% - which even today is a very good deal for a pre-product company, and allowed thousands of founders to have access to a much better deal than they would otherwise.

Who is left out at this point? Pre-product companies that need money to get the MVP done, and foreign companies where seed investment is done on much worse terms than in the US for a variety of reasons that are regularly discussed here. They don't need much; as has been amply written about you can get ramen profitable on 20-50k with many ideas, and this is literally years of living costs in much of the world. But that capital is just not available because wealth is concentrated in (often foreign) land, bonds and blue chip companies. 1.5% is laughably small, doubly so when you consider this is basically free money unless you become a fairly decent success.

YC is not the only company who understands this. The very idea of 500 Startups - "if you have an angel, you're eligible" - is about numbers over any attempt at reading the future.

I can't wait to see how it works out. And how people will copy it. And I love the philosophy of it: YC is expressly saying that no, not all talent is concentrated at "Stanford" - that there are many variables in life (such as geographical location or social background) that will impede a large number of talented people from having access to the resources necessary to capitalise on that talent.

[1] https://en.wikipedia.org/wiki/Digital_Equipment_Corporation#...

[2] http://www.dollartimes.com/inflation/inflation.php?amount=70...

[3] http://www.bloomberg.com/news/articles/2015-12-03/uber-raise...