The amount of money more-or-less promised to all YC companies is deceptively larger than the amount YC itself publishes. Also, until you get to Webvan sizes, there are existence proofs to pretty much all the possible company sizes at YC.
I am aware that there are very large companies that were originally funded by YC. There are some problems that do not begin with throwing some code on EC2 and iterating to success. Hardware design and production is the area that comes to mind. I realize that there are a few companies that were funded by YC that did some hardware design and production, but they are certainly not representative of the entire problem of hardware design and production.
No business starts with all the money it will ever need. Some YC companies are profitable in the first year and never need more. Some raise hundreds of millions for capital intensive businesses like Dropbox. The size of seed funding is not a limit on the size of problems companies can tackle.
That's certainly true. If you want to do something that requires 10s of millions of dollars to get off the ground, seed funding is not for you. Car and solar energy companies are great recent examples. Hugely capital intensive, and you'll note the pace of innovation is slower to match...
I don't think there's any problem that doesn't benefit from being worked on by a small, focused, core team (what seed funding can cover) before scaling up. Step 1 in building an innovative business is never "hire 100 people".
