This makes sense; YC is all about paying a pittance to a huge number of people without experience or connections, and from that farm team a very small set of promising candidates emerge. Investing in that set would likely be reasonably profitable, especially as YC has already conditioned the founders to accept low valuations even though they are now in a much more exclusive pool.
especially as YC has already conditioned the founders to accept low valuations even though they are now in a much more exclusive pool.
Actually YC startups are conditioned (by the market) to expect higher valuations post-YC than they would attract had they not been through YC.
However YC encourages founders to care more about the value offered by investor than the valuation. At the same time, PG points out that the smartest investors double down on the best companies, no matter the valuation.
The main benefit of this fund for both the investors and the founders is that they'll be talking the same language and will be able to get deals closed quickly.
