This is why YC's audience is typically college students and very recent grads, who are less likely to have additional obligations. Or, rather, originally the YC concept was geared towards this audience, and the funding amount is an artifact of that.
I think they will cover whatever you want initially (eg, moving expenses, renting a place), but my interpretation is that that comes out of the 5+5n.
I haven't gone through the process myself, but I saw their pitch at a NYC tech panel a few months ago.
Investors are looking for deals, and it isn't too difficult to network into an initial meeting.
The one nice thing about the application (like YC) is that it forces you to define your project succinctly.
Also like YC, getting funded is no guarantee of success.
It'll take a very compelling story.
We once tried funding a group that didn't move. When they flew in for demo day, they looked like the plant that hadn't gotten the Miracle-Gro. The upside of that rather expensive experiment was that it showed us how much YC helps people.
There is the argument that "is your startup not important enough to leave everything else behind" ... but thats being a little too harsh.
