The "something" that they see is that they have a 1% chance of success. YC is an investment strategy. They noticed that equity which is 99% sure to be worthless is heavily under priced and bought a ton of it. That bet paid off handsomely.

If your batchmates are seeing embarrassment from who else is at the top of such a funnel I don't think much of their judgment. Investors provide capital, not prestige.