Why is this a good thing? Shouldn't we be striving for a merit based system and not a system that benefits the few people that are able to get through the YC interview process?
It doesn't matter who you are, where you went to school, or what family connections you have. It's an open application available to anyone in the world to sell some venture capitalists on the merit of your ideas. How does it get any more merit-based than that?
There are so many random things that can befall a startup, that any support network is great. This is no different than Steve Jobs mentoring people, because others mentored him.