There are plenty of companies around here who could swing the money to fund YC-sized groups at YC-sized investments. But YC is extracting 6% from promising startups for the same reason that 37signals is extracting millions of dollars for a web-based bulletin board: the total package is compelling.
In YC's case, you're getting access to a hands-on software startup fanatic who's words you already hang on, plus the network of VC's his team has built up over the last N years. Part of the YC pitch, whether Graham says it or not, is that it ends in a showcase "demo day" which seems to improve your odds of scoring an "angel round". And in Autumn of '09, it's hard to get around the brand value that YC has. Getting "accepted" into YC is a marketing win.
I don't think cloning YC is a smart play for Chicago. It's possible to not like what YC stands for: the notion, implied or stated, that starting a company is similar to applying for college. There's got to be another way to nurture startups in Chicago, one better suited to the climate that we have here: hard workers flying under the radar independent of financiers and other gatekeepers.
Maybe there's some kind of umbrella contracting thing that we can come up with.