I get the feeling that YC (and similar incubators) are less about making a profit and more about connecting successful entrepreneurs with up-and-coming entrepre

I get the feeling that YC (and similar incubators) are less about making a profit and more about connecting successful entrepreneurs with up-and-coming entrepreneurs. This isn't bad; it gives the YC partners (most of whom never need to work another day in their lives) a way to give back to their community, and I suspect many of them enjoy it. It can't be based on pure charity because that's not a sustainable model, so there's got to be an equity component. But I suspect YC barely breaks even. Regardless, the way VC measures returns is typically at between 70% and 100% of the life of the fund. If after 7 years, you're getting 1x your money back, that's a pretty big loss considering you could have just put it in an S&P index fund and earned ~7%. Even a 2x return after 10 years isn't that great; you're looking at an equivalent annual interest rate of ~7%. Things don't even get interesting till you start talking 5x or more (~17%). The time component of the equation is very important; the only reason people invest in VC is because it has the potential to provide greater returns than other asset classes if you're patient enough to wait 10 years for the payoff.