Ycombinator has made a lot of money based on the idea that some people are better at creating start ups than others. They don't just bet on ideas they also bet on people.
I have no doubt Y Combinator would still be successful even if their selection method was not very good. (I tend to think about top universities the same way—the quality of Harvard's admissions process is not the core reason they graduate so many successful students.)
It would be interesting to know about some companies that don't get to Demo day or that doesn't put out a great presentation
But then again, I was just rejected from Harvard, so you might want to take my opinion with a grain of salt.