[andrewparker]

YC companies address customers in diverse sectors, but if you were to classify YC companies with a GICS code, 99% of them would fall under Internet Software & Services (code 4510) [ http://en.wikipedia.org/wiki/Global_Industry_Classification_... ].

So, it's not really a diverse portfolio, but it's definitely a portfolio play, which is substantially less risky than having all your assets tied up in the stock of a single startup.

Think about it this way, if 2001 hit again and all tech stocks plummeted, all the companies in the YC portfolio would be substantially negatively impacted, so there isn't a portfolio effect to protect against this correlation in YC's assets.