The equity is insignificant, specially for the top startups. What those 20k buys the VC is first-hand knowledge of what is going on with the company and (hopefully) a better chance to invest additional money when/if the company takes off.
Of course, though it's still half of what they'd get before. That is better for the startup. Don't take more money than you need, unless you're getting a really good deal - though then you could burn and piss off VCs and may look bad during future rounds.
