[jacquesm]

Network effects at work. VCs will probably not find it amusing if - and of course when - they realize that they have been disrupted. But it is a funny kind of poetic justice.

Everything, even capital markets can be disrupted (or at a minimum greatly shaken up) by a dedicated player with a technological advantage.

And once the network effects kick in you're going to have a very hard time gaining back lost ground.

I predicted YC moving in on capital providers a while ago and I expect that trend to continue once YC has cashed out on their first batch of major hits. They'll be so flush with money that the only reasonable way to use it will be to do their own series 'A'.

Right now that's not in the cards and they should probably deny such a possibility as strongly as they could. But once the money is in they're going to be very much tempted to broaden the scope and become a two stage rocket even though there are obvious drawbacks to that strategy as well.

[agwa]

> They'll be so flush with money that the only reasonable way to use it will be to do their own series 'A'.

The other way to use that money would be to have gigantic batches. Remember, pg and sama have said that they're trying to build something akin to a university with Y Combinator. Using their money to do series A's instead (which is what other accelerators are already doing) would just be so conventional, and not what I'd expect from an organization as innovative as YC.

[outericky]

This. I'd think batches with 200 (500? 1000? startups) will come before Series A's. If only on principle.

[jacquesm]

With batches that large the positive effects of the 'classes' model will vanish, it will also require a much more efficient way of processing the applications and that will lead to (percentage wise) more rejections of good applicants.

YC is as good as they are because they really work hard on processing those applications and even though it is software assisted it is still to a very large extent handwork.

[walterbell]

Yes, this leads to philosophical questions about the relative compounding of labor, creativity, capital and future-constraining financial instruments.