Remember when applying to YC and other batch based accelerators: you might not get in but in some cases that says more about the accelerator than it does about you and there are plenty of other roads to success.
Bingo!! this is the ACID test for an entrepreneur/founding team .
It doesn't have to be a fault of the idea itself or the accelerator.
(Comment made with no experience with accelerators, but with experience asking for research grants, which I assume is not so different).
The parent comment very specifically covered that appropriately with this:
"but in some cases"
1. Whether you're an incubator or a VC, batting average doesn't really matter. All that really matters (from a financial perspective anyway) is that you don't miss out on the super successful hits. I think it was one or two years back that pg said that something like 70% of YC's total return, since founding, was Dropbox and AirBnB. Thus, while Overleaf has become successful, at the end of the day it's not something that would really move the needle much for YC. 2. It's all about percentages, so of course you're bound to miss some winners. It's also possible that since Overleaf's addressable market (scientific paper writing) is not gigantic, YC might be less rigorous in finding "diamonds in the rough" if a startup's addressable market is not that big (pure speculation on my part). 3. Numbers 1 and 2 should highlight that the needs and goals of investors and founders are not 100% aligned. Investors want to find the few mega home runs, while I think most founders would be happy with a double or a triple. Kudos to Overleaf for their perseverance and success!
So I would guess their strategy is more like 'try to fund all potential future unicorns, and fund a bunch of others that seem cool and in a way so that those don't lose money on average'. That's certainly the strategy I would have chosen!
The thing is, it's hard to to tell, especially from the outside, whether a company can viably become a billion dollar company. Sure, you've seen plenty of YC companies that ended up either not going for it, or not looking like it's possible for them to end up as unicorns, but this is in some cases too late - you aren't hearing their pitch, in which they explain why they could be the next billion dollar startup.
Investors who want to make money take seriously the idea that one real success is the only thing that matters.