I don't think its as much as "need permission to start a company." It's just more at a chance to walk through a door of opportunity that not everyone gets to do. It's not just an investment, but its an excellent opportunity to network and meet really cool and smart people as well as have you and your idea sat down in front of other potential investors. One of the biggest feats of raising capital in order to accomplish some of the things that some of the people here want to do is getting that recommendation. Well, this is our chance to get that recommendation.
My venture, for example, we're still working, still talking to people, still getting stuff developed and getting out and selling our idea. If this doesn't go through for us, it just means we don't get a "Go to VC free" card (if you will). We'll still keep doing what we were doing.
For what it's worth: you don't get a "go to VC free card" even if you're accepted --- last I checked, a minority of YC companies had closed A rounds, and that certainly isn't going to get easier in 2009.
My venture, for example, we're still working, still talking to people, still getting stuff developed and getting out and selling our idea. If this doesn't go through for us, it just means we don't get a "Go to VC free" card (if you will). We'll still keep doing what we were doing.