You know what? I'm not really that upset. They made a good decision from their point of view. But we have 200+ beta users, lots of positive feedback, and have a good product.
We don't need YC to tell us that. So just keep on truckin. Get users, iterate, and make YC regret rejecting you :-)
If I was them, I probably would've made the same decision. But we're still kicking ass :-)
EDIT: to clarify, YC was never about the money for us.
Like I said, it had very little to do with Heroku and the money. We have a product with users and we wanted some help and to contribute.