I think the word 'principles' is leading to a bit of confusion here. I used that word because I was referencing https://www.ycombinator.com/principles, but I don't mean moral precepts, I mean YC's investment theses. These, for example:

"Y Combinator’s goal is to cause there to be more startups, by helping founders to start them."

"YC’s value is the number of startups we help times how much we help them."

The point is that funding new startups in the same markets as previous startups it funded is a consequence of YC's model. Not to do it would be self-contradictory.