The 7% YC takes for their $125K investment doesn't seem quite right for anything other than two or a few guys with laptops. In other words, if you are going to make a bet that is far more likely to result in a loss, on people without serious overhead and no skin in the game, sure, yeah, 7% is fair and might even be low.

Note that my perspective in saying this is hardware. I've done hybrid (hardware + software) companies my entire adult life. It's all I know. And, so far, 100% of everything I've done has been self funded. I've had some success and lots of "experiences". Such is life.

While today hardware can be far less capital intensive than a decade or two ago, there is no escaping the fact that it is much, much harder than pure software businesses. I spend more money on tooling and specialized engineering design software than the best computers a pure software startup would typically buy. Heck, I have a drawer full of specialized crimpers and tools that is probably worth as much as a nice BMW.

It's the old bits vs. atoms game. Iterations and pivots cost real money and a minimum viable product can cost tens to hundreds of thousands of dollars. And mistakes can clean out your bank account and take months to iterate or pivot out of.

This paragraph in the YC deal page (https://www.ycombinator.com/deal/) definitely does not ring true for anything but what I would call the most trivial of hardware startups:

"We think that $125k is currently the right amount for founders to be able to run their company and pay expenses for around 5-6 months, and sometimes even longer."

Yeah. No. I have been working on a self-funded startup since approximately March. It has taken somewhere in the range of $250K to $350K and a lot of man-hours to get to the point where we are about to start showing the MVP to prospective customers. With some products you only get so far with Powerpoints and hand-waving.

And so, while I think I would be quite interested in participating in the YC program, I can't see my way to handing over 7% for $125K. The next phase of this startup could consume that in a month. Hardware startups run on blood in the form of cash. If you can't pump it through the veins you starve and die.

Maybe YC needs to have two kinds of deals: One for guys-with-laptops companies and another for non-trivial hardware startups.

What I mean by "non trivial hardware startups" is anything you can't do with a good looking video and an interesting story on Kickstarter.

I am doing yet another startup that is being done in an entirely different way. In this case we've been talking to a prospective customer for over a year. He finally got funding for his project and it looks like we are going to get the contract we were looking for to launch the business. Once again, the work and investment it took to get to the point where this customer is willing to issue a (possibly) million dollar+ purchase order for this transaction is well above a $125K seed investment.

Anyhow, I do understand that this perspective is likely well outside what a typical YC company might be like. Let's face it, hardware startups don't unicorn at a rate even remotely close to software startups. I think I can say most never do. They can be amazing and super-interesting companies but moving molecules is much harder and slower to scale than moving bits.