Speaking to an office full of YCombinator founders this week, I was struck by how they described what they imagine to be the future of YCombinator. As they noted about the most recent graduating class, many of the top performers in the class had months of recurring revenue, with double digit month over month growth and significant traction. YCombinator is getting more and more mature, and companies are graduating from the three month program with traction, customers, and revenue. This is largely because, according to the founders I spoke with, applicants are getting stronger and stronger. Lately, companies are incorporating, building their alpha, and even beta, and then applying to YCombinator.

By this argument, the rising valuations of YC companies on Demo Day have less to do with the improving brand of YC and cult of PG, or with the mentorship within the program (which I hear has been diluted with size) but instead speaks to the fact that companies are applying to the incubator later in their cycles. 15 years ago, venture capital fundraising was once a matter of relationships and a PowerPoint presentation, but has since moved way upstream. Startup costs dropped, thanks to cloud computing and Moore’s law; today, by the time you’re raising venture capital, your product likely has at least tens, if not hundreds of thousands of users, sustained growth, and revenue.

This created a gap in the funding ecosystem which brought on what seems like a glut of angel investors, seed investors, and super seed investors. It also brought YCombinator. But that seems to be changing. This funding ecosystem once provided people with “just an idea” a place to get mentorship, infrastructure, and a chance to grow before the big show. In the case of YCombinator, it seems like they’ve moved upstream, too. By the time you’re applying to YC, your product is much further along today than it was when YC first interviewed the likes of Loopt and Reddit. Yes, pg pioneered the accelerator model to respond to the gap, but may be creating a new gap in his wake. I wonder if there will be another generation of programs fitting in the space YCombinator leaves behind.