It's an approach that has clearly worked very well for YC and you can't fault them for doing what works, but it's good that not everyone uses this approach since a lot of good ideas and good people would never get funded this way. It's also pretty costly for founders: each team spends hours or days putting together their application and potentially several days traveling to the interview (unless they're lucky enough to be in the bay area already), all for a few minutes of YC's time and a tiny chance of acceptance.
On the other hand, most VCs, if they're going to talk to you at all, will schedule a one-hour meeting, which they're happy to do over Skype if you aren't local. Meanwhile, getting an intro typically requires far less time investment on the part of the candidate compared to a YC-like application process (you just need someone to send a short email). But, yes, you have to get that intro, so if you don't have connections, it's a problem.
I don't think you can really say that either method is objectively more or less fair; they are simply different kinds of processes that have different kinds of bias and costs. I think it's important that YC exists as an opening for the large number of great teams who aren't well-connected, but I also think that if every VC worked like YC it would make fundraising much more costly for founders and a lot of great ideas and people that get funding today would not succeed under such a system.
Really, the best thing is for lots of VCs to be doing lots of different approaches, even if each one has biases.
The idea that the best entrepreneurs are good at things like personal networking, or ladder climbing, is clearly false.
One example: Elon Musk didn't have the "hustle" to talk to anyone in the Netscape lobby, when he marched in there to get a job. He nervously stood around for a while and then went home in quiet shame. That's Elon Musk before you knew him.
First Capital realizes this, and is making a move to capture the important opportunities they would miss out on otherwise.
Unfortunately at scale YC operates today (~2,500+ submissions per batch) this is no longer true. It's simply too difficult to get through all of that noise without "knowing someone", and the exceptions to that rule are getting rarer every batch.
Source - ask any YC Alumni candidly.
Source - YC partner.
Have a great idea, a great team, show some traction. Traction probably doesn't have to be revenue. Just find something that shows other people want what you're building. Great team means you're the best team for your idea. Not necessarily Ivy League school or Google/Facebook/Amazon employment.
Our founder split made them worried / didn't fit with their thesis. That seemed to be the only thing, based on our back and forth.
So, keep in mind that YC is looking for something very particular. It does strongly suggest however that YC is very open to taking teams they don't know as long as they fit their official and unofficial criteria. They make a serious effort to be transparent but they are also oberworked and are pretty much a black box to most startups they reject. They surely were for us, I just got lucky to get an answer.
When we make an accelerator, it'll also be based on a certain way of doing things. But it'll be very different. We believe that standardized platforms make a huge difference - YC has one as do other accelerators. But we have an actual software platform on which others can build their apps. It would be as if FB ran an accelerator program to develop new businesses on top of the FB platform. Our program could have actual measurable metrics to determine who is funded further and who is not.
> Should everyone apply to First Round through the OpenApp?
> No. The best way to reach us is still through a referral.
Other VCs want to believe in "proprietary deal flow" and their own ability to worm into hot companies. Probably because it seems more a sure thing than, gasp, actually judging startups on their merits, like YC at least tries to do.