Im sure a ton of the companies who apply to YC and dont get in are still Grade A. But you have to trust YC knows what they are doing, and the A+++ companies will be picked over before they hit second or third tier.

You have to remember that investing in companies is a lottery game. Most angels/vc's profits are made on that 1 in a million company with a 1000x return.

If YC wants access to truly the best companies, they need to institute a rolling admissions. Otherwise, these scrappy second tier incubators will get lucky a few times when a nervous founder takes a bird in the hand over two in the bush. The policy only hurts YC itself.