I’m surprised no one has mentioned this PG essay, black swan farming. YC appears to have switched to exactly this strategy. Invest in a far larger set of startups, with more possibility of failure but also larger possibility of finding the rare large ones.
This is an excellent essay that speaks to the financial calculus of startup investing.
In addition, I think YC partners also have a non-financial desire (e.g. first footnote in that same essay) to encourage entrepreneurship more broadly. Hence the larger YC batches and experiments like YC Fellowship [1] and online Startup School [2].
http://paulgraham.com/swan.html