You're suggesting that greed (YC acting in their financial interests) is a bad thing. I don't think it is.

What makes investors successful, is the same thing that makes startups successful: Figuring out a pattern that works.

What YC is doing is betting that lots of small investments in hackepreneur types is better than what VCs and other early-stage investors are doing.

Also, I don't see much evidence of them "desperately trying to prove themselves". Looks like they're doing what any smart investment group should do: Trying to attract great entrepreneurs that they think they can help. If Paul and company were good at detecting and promoting talent in the life sciences sector, that's what they'd do. But they aren't, and so they don't.