" But such blanket offers will mean lesser money available to non-YC companies"

I actually think precisely the opposite will happen.

I think you're right. It's like the concept of "anchoring", setting a new normal.

I dont have first hand experience of US placements. But this is what happened in India when IT services started booming.

If you go to a top college, they dont interview much. You get a very fat paycheck. If you go to tier II college you are interviewed a bit more and given a bit thinner paycheck.

Over a period of time this became a positive feedback cycle and is the core reason for very low quality yet expensive workforce.

What I feel in my gut is - such blanket investments normally take up valuations to such levels over a period of time that it becomes unsustainable. Whether it is with job markets or investments or real estate.

I thought this too, but someone pointed out to me that, unlike new hires at companies, customers don't care whether you're YC or not, or who you took investment from. The market is still as harsh as ever, and you'd better produce if you're going to make it.

The only place I can see this as being a problem is with acuhires, where an acquiring company can potentially care whether it's a YC company or not.

> But such blanket offers will mean lesser money available to non-YC companies.

They could have bought a boat instead, investing is not a zero sum game, they don't have to spend the money.

Right. We will just invest in all YC companies. Why bother reading up business plans, checking out markets, exploring new things. YC thinks some one is good, we will put our money. If 10% of YC companies give huge exits fine. As investors - our job is to just provide money. Why bother with research?

And as an entrepreneur, do you really want to take money from some one who might not have enough knowledge about you and your business? Who is relying on a second hand judgement about you and your business, even if that judgement directly comes from pg?

"And as an entrepreneur, do you really want to take money from some one who might not have enough knowledge about you and your business?"

Um, yes. Taking money with these terms is a no-brainer. It doesn't preclude you from taking on more active money or taking on advisors. Anyone who puts together an angel syndicate almost always has investors who say, "I'm really busy, so I can't help out much, but here's my money". Most angels think about your business for a few hours a month, at best.

Most things I learnt about my own business had been through quality meetings with quality investors who can ask really good questions. At least from first set of investors, thats what I look for the most rather than money.

Having said so I do see your point as well and we can just agree to disagree.

Just because you want smart money doesn't mean you should refuse free money. If an angel were looking at a team that didn't take this money, they'd have to wonder if they were competent enough to run a business.

I'd say free money is more corrosive - yes in the hands of some (some is relative) it will be useful. In the hands of others will let them walk down a bad path longer.

For analogy, I'd use the resource curse. Countries which should theoretically be paradises are not, because their natural resources prop up bad economics and bad governance.

As always, its an opinion. I guess a data driven answer would depend on the contra event of what these companies would have done if they weren't offered the money.

"As shown by history - this does not work in the long run and makes things worse than better."

Any evidence for this statement? Because I think the system works just fine.