VCs didn't want Dropbox or Airbnb or Stripe without YCs stamp of approval.
YC could very plausible fund as many startups as there are ambitious and determined founders.
Let anyone participate in the programs and then let the startups filter themselves out by failing to keep up the progressively more challenging levels of effort.
Each class is like 130 startups now, right? I keep seeing startups that duplicate other existing YC startups. I just imagine as an investor you have to be thinking "Ok, now there are 2 or 3 or 4 times as many startups as 3 years ago being pitched to me that are going to fail."
Patrick from Stripe said something like "Everybody still thought we were crazy, but Peter Thiel was also crazy so he invested within two hours of meeting... after that it became much easier."[1] There was also an email exchange with an investor about Airbnb that PG shared where the VCs just weren't interested and the valuation was amazingly low in retrospect. There's a deep level of conservatism in nearly all tech investors and a lot of herd-like behavior. There's a huge premium for being on their social graph and for going to the same school they did (or one many of their friends did).
Fundraising is one of the least meritocratic aspects of startups.
Perhaps the most extreme example of this I've seen is looking at Vectr vs Figma. Vectr is about a year younger but both companies have been around for a few years and are being developed at roughly the same rate. Figma is in SF, run by a Thiel Fellow and has raised nearly 18MM[2], whereas Vectr is run in Asia by a Canadian guy with few connections and has struggled to raise anything[3].
This is insane considering there's such a clear comparison between the two companies, and the one that has raised a tiny fraction of the other has somehow managed to recruit a top-notch team, keep parity on the product and even started pulling ahead in some areas. It's also completely normal. Companies run by founders out of Stanford/Harvard/YC regularly raise boatloads of money while their competitors who sometimes eventually prevail can't raise any. Fundraising often tips the balance.
There just aren't enough investors who truly believe in black swan farming.
[1] Related Stripe interview: https://www.startupgrind.com/blog/from-the-vault-patrick-col...
[2] Sigma https://www.crunchbase.com/organization/figma#/entity
[3] Vectr https://www.crunchbase.com/organization/vectr-4#/entity
Beyond the specifics of this one matchup, the trend is pretty undeniable. Pedigree is a huge advantage in fundraising and being outside of the US is a huge minus, even if the company is incorporated in the US.
Doesn't this happen anyway simply by exposure to the real world? :)