A fascinating move on a number of levels. Though it’s important to note (as Y Combinator’s Paul Graham does) that this deal has nothing to do with the Y Combinator organization itself. It’s simply between the investors and the startups coming out of each class.
This means that YC LP Sequoia (or anyone else) could do the same thing if they wanted to.
Of course, most firms would not want to do a blind blanket investment. But this is bold statement by SV Angel and Milner about the quality of YC companies over the years. They’re absolutely betting on Graham’s vetting process.
And it really isn’t an expensive bet to make given the potential upside and the piggy banks involved. But it has to scare the shit out of other VCs/angels who either can’t afford to make such bets or think it would be insane to (insanity with the possibility of paying off big, of course).
Good or bad, it does change the game.