In my experience with both Xobni and Dropbox, I stand by my earlier claim that “Y Combinator hatches brilliant entrepreneurs.” Both have been funded by very reputable VCs and continue to thrive. But both started before the major economic meltdown.
Today all startups are having difficulties raising Series A funding – including Y Combinator startups. Jamie offers an interesting alternative model in his post that suggests incubators should provide more/longer help for their startups. Venrock’s Quarry is similar to the model that Jamie is proposing. The additional benefit offered by Venrock is that they often provide the Series A round of funding to the startups that they incubate.
Hindsight will tell us which model is best in the current economy – but for now I have no clue.