Y-Combinator isn't competing with VCs, if anything, I'm sure it's glad to have new reputable ones emerging. They're much closer to "competing" with angels, yet they're out there trying to drum up more of them. YC invests about $15k. VCs normally won't mess with less than $1mm. Conceptually, YC seems more like a ready-made, actively involved, advisory board than a first investor, to my eyes, anyway.