I don't think it's a bad deal. $120k is decent seed funding, 7% is reasonable equity for that amount. Their previous deal, I thought, sucked (6-10% equity for $15k-20k). This one is reasonable.
Recently, Sam Altman released some statistics ... they've funded about 900 companies of which about 7 unicorns have emerged. That part of the story is great.
The problem is, 300 / 900 went out of business. That's 33%. My analysis is that most companies are not fundable, and if funding is your criterion for success, many companies would fail. That's where the extremely high Infant Entrepreneur Mortality statistic comes from.
I prefer working with a different philosophy: Bootstrap First, Raise Money Later. In my Billion Dollar Unicorns book, this theme is one of the recurring ones that has yielded success after success.
So it depends on who you are, what you are looking for. If it's okay for you to play the kind of odds YC offers, then their deal is as good as any other equity-based accelerator. Most others do not offer their level of support, network, branding.
But remember, while for YC, this is a portfolio, for you, it's your life. You get to do one company at a time, and if you go out of business, then you write off several precious years of your life.
With that background, 33% infant mortality rate is not very attractive. You first need to survive, then succeed.
Photo credit: Paul Miller/Flickr.com.