In a word, this is freaking amazing.

In case you hadn’t heard, something fairly radical has happened in the world of early-stage investing in Silicon Valley. Every Y Combinator company will receive an extra $150k investment (if they want it) on fairly generous terms, to top up the seed amounts that YC puts in.

From an entrepreneur’s perspective (I’ll be doing Y Combinator for the second time this summer), this is fantastic. Obviously the news has generated some debate, with some saying Yuri Milner may be a threat to Silicon Valley, and people are forgetting that this is simply an offer, and not an obligation to the startups, that any investor could have made previously too.

What’s crucial however, is what the entrepreneurs think (it should not be surprising that other investors think this deal is ‘threatening’). There was a video of the announcement on the Anybots site (since taken down), and you can see the current YC founders spontaneously clap after the announcement is made.

I’ll tell you how this changes things (though I hope I’m not jinxing anything and that this deals persists til the next round).

After demo day, at the end of the three months of YC, for better or worse your focus turns towards raising investment. Raising investment can be a fatal distraction, you are no longer working on product, you spend your time trying to persuade investors about a vision, when you yourself know that the vision will likely change. Quite frankly, it’s horrible to have people say no to you, and have 20+ meetings of which only a few are genuinely useful.

Now, with $150k, you can time your investment raising better. You don’t have to immediately do it after YC. If your product takes 6 months to build rather than 3, this helps you.

And, it doesn’t make you any less scrappy. $150k doesn’t mean you’ll go an a hiring binge or throw parties or even get an office. What it does allow, however, is for you to hire a better designer, eat healthier, maybe take on an android contractor and have the mobile app launched 3 months earlier than scheduled. And, crucially, for the founders, it’ll allow you to focus more on building something and getting users in the all important early stages.

For that reason, I’m even more excited about doing YC this summer.