One idea to reduce volatility in financial outcomes: offer equity in the YC fund itself in addition to the equity in individual companies. That would also give employees an incentive to support other employees in the cohort.
Other options include pooling of benefits, and active job placement when things don’t work out.
Pooled equity would have to come from the startups rather than YC. Instead of “for 6% you get 200K” it could be “for 10% you get 200K and an equal share in the pool of your class. Divide it amongst your employees as you want, though we suggest....”
Well, presumably you'd have to take (at least some of) the companies' option pools as well, but I'd believe that the math still doesn't work: that just reflects that the equity for employees is not a valuable deal in general.
