While going through YC for no money and 7% would probably be worthwhile for many startups, simply for the exposure and advice, I know for a fact the ostensibly terrible terms have deterred many good applicants. I tried for years to apply to YC with a partner who insisted on not taking such terms. While I think he was wrong (and perhaps that signaled some other problems with the partnership,) I'm happy to see the issue go away. A valuation of $1.5-$2M is quite fair for an early stage startup, particularly with the value-add of YC.