[mathattack]

Having multiple stages of the process is perfectly ok. The risk is offloaded to those who can bear it. Small teams of very young people can take home run like risks by bootstrapping. YC diversifies the Angel risk by giving lots of advice and structure to large groups of firms. The top VC firms provide growth capital, but even there it's not about sure things. Many investments lose money, but it's not as risky so they can have relatively fewer investments with much bigger bets. By the time it's a so-called sure thing, firms have done their IPO.