I see what you mean, since Y Combinator is an institution now, and its selection process has an impact on the overall ecosystem. But let's say Startup A, which

I see what you mean, since Y Combinator is an institution now, and its selection process has an impact on the overall ecosystem. But let's say Startup A, which is top-tier, would become a $75M company with Y Combinator's help, but would become a $50M company without them. Meanwhile, Startup B, which is second-tier, would become a $3M company with Y Combinator, but would become a $30K company without them. Even if we throw profit out the window (which an investment group doesn't do, obviously), Y Combinator would add a greater total dollar value to Startup A than to Startup B, even though they would multiply the value of Startup B by 100x. Also, elite prep schools do try to fill their classes with nothing but brilliant students, for a variety of reasons, including money and prestige. There are some negative consequences, to be sure, but it happens. At least Y Combinator increases the size of its classes every year, unlike prep schools.