YC, despite being compelling to young entrepreneurs, presents too high an opportunity cost for a season professional, yet a megabuck is too much for an initial build.
There are only two ways to get money for a startup: 1) top line revenue from a product or service or 2) sell equity or do a debt note. That's it.
I've estimated that the required amount for a "real" seed round in today's open source environment for tech ventures is about 200-300k. That is unless you are young and can do the coding yourself. However technology isn't the driver any more for startups. The scarce talent is business model engineering and product marketing - building for scale isn't the problem anymore. I can build a hack protytype that works well into the "validation" stage to establish a funding event or customer revenue stream then use the new capital to rebuild, hire and grow.
I think YC has demonstrated that a $10-$20k initial seed round is enough for a software-only prototype in a few months, assuming technical founders. Presumably there's a comparable cost to your "rebuild," though please correct me if I'm wrong.
I wanted to grow it past what I was capable of doing on my own, and I started talking to VCs. They were all trying to get me to write budgets for ten, twenty million. My cost was my time and my server bill. I really had no idea what to do with that much money.
I coulda used $100k-$500k to build out a sales team, hire a few developers, maybe a content manager, and be fully funded for at least two years or so...
.. oddly, I couldn't find anyone who was willing to fund me for a reasonable amount, and there was no way I could justify an insane valuation the tens of millions guys wanted.
SiliconANGLE incubates a few startups along those lines (SALabs), and for a time we were looking to align with a larger fund to do that on a more scaled up capacity, but it seems like the establishment VC firms aren't particularly interested in that concept.
Now that I reflect on our past conversations with said parties, I imagine that it's entirely possible that they're highly interested in the idea, but the wheels of their business move so damn slowly that at some point in the next two years one of them will come back and say "let's do it." I'm not holding my breath.