paul, you innovated with a new form of venture capital called ycombinator. you've figured out how to get the right amount of capital to a new class of entrepreneurs and the results speak for themselves. you've attracted a bunch of copycats, some who will do good things and many who will not.
that's the kind of thing that i would like to see more of. we don't need more money flowing into the existing system which is at capacity and has been for years.
Do we know if Y Combinator is profitable yet? One quality that is likely to limit copycats comes from the fact that it is not like a VC. It is not out there with prospectuses advertising its performance to the deep pockets.
If the YC model is indeed profitable, then it might be time for an enterprising financier to go out, raise a fund, and do it ten times as big. Of course, the success rate will be somewhat lower, since the personal attention and advice that YC gives its companies just won't scale.
If the model is profitable, I would guess there would be private money to be had. I just don't think anyone knows how profitable the model is yet. It is still new, risky, and unproven.
Just because some guy with a ton of domain knowledge can earn a decent return off a few dozen companies a year doesn't mean it will work at scale.
If you want to see more YC-style funding and traditional VC is at capacity, can you (big VC) not take an active role by allocating some of your excess resources into YC-style firms? That could help these firms (and ultimately big VC) add more startups to their portfolios.
Of course, this is assuming they are honest about having to reluctantly turn down high quality applicants each year. I'm sure the relatively small number of mentors would become a bottle neck at this level, though.
that's the kind of thing that i would like to see more of. we don't need more money flowing into the existing system which is at capacity and has been for years.