Why is that? convincing banks to give you money will be much harder, at a high interest rate, and you have to give the money back whether you're successful or not.
If your company sells for any appreciable amount of money, the "interest" you pay YC will be astronomically larger than any loan anyone would give you.
But the value of YourCompany today is (for any 'big idea') something like P(small)*Size(idea).
The trick of accepting the dilution of YC is to make estimates of whether the idea could 7% become larger/better. Or (more easy to understand) whether the effect of YC on all the components of P(small) could accumulate to more than 7% of P(small).
If your probability of success increases as a function of your investors, for instance, YC easily earns its 7% just due to pure signalling effect. If you're looking to get better hires, then the YC seal-of-approval could easily elevate you into the 'A-Class' of hires that everyone insists makes the difference. Of course, there are a lot of other factors : but scoring a total of +7% on them overall is all that should determine whether to choose a place with YC (supposing that you've been accepted).
