Regular seed funding groups can work that way, sure. But they're for different purposes.
On the one hand it's seed stage, the very large majority of seed investments turns out to be wasted money, so there is a premium to be expected.
On the other hand $20K means that the startup will be looking for money again in the very near future, and getting follow up investments is a very time consuming job.
Then there is the fact that YC makes a bunch of very invasive requirements of the 'founders', they have to basically give up their life and family for this chance to be a player. That's a decision everybody makes for themselves of course, but you have to balance what YC can give you (a one time shot at the jackpot) to what you've already got.
I think this is why YC skews to younger people, the price to pay for a chance like this is a lot smaller when you're younger.
Also, older people tend to be unimpressed by $20K, especially if it is for multiple founders.
But yeah, you are right. it's not about the money. It would probably make economic sense for me to give 6% of my company to pg, even without getting any cash, just for the marketing effects.
I stand corrected, though it wasn't the main point.