Is the "signaling" idea mostly about the differential signal that would be sent about companies they didn't invest in, if this automatic policy were not in plac

Is the "signaling" idea mostly about the differential signal that would be sent about companies they didn't invest in, if this automatic policy were not in place? Like, no matter how awesome Company A is, if YC chose to invest a disproportionate amount of money in Company A, then everyone would say, "what's wrong with Company B?"