Interesting. I guess that puts YC much closer to being like an angel group than a VC firm since they didn't raise money from investors and decide to get rich from the management fees in the process, but risked their own money.
A site where you vote on links? Why I could build that myself. An SMS interface to PayPal? Why I could build that myself. A website that gives away money to startup founders? Why I could build that myself!
I guess a sort of important related question is: "Is money really much of a bottleneck here"
If there was much more money from investors or the partners, would YC fund any more startups then it does? I have to admit, I know virtually nothing about how YC works, but it doesn't sound like it's all that capital intensive. And the cycle shouldn't be that long either.
It's a lot easier to get third-party investment once you've successfully sold a startup, and it's much less risky than pouring your own cash into your next venture. I'd say it's far from a foregone conclusion that you'd put a large amount of your own money in.
I'd have to add that YC isn't exactly your average startup though, and the founders putting their own money in sends a much stronger message of dedication to potential participants.
It would be easy to raise money if we wanted to, but we don't need it. The investment required is not so great that it's dangerously large for any of us.
