Correction: Time is on your side, IF what you're building is inherently better than what the competition is building. In the long run, valuations approach inherent value; in the short term, valuations reflect market sentiment and irrational factors.
If, on the other hand, you're building yet another web 2.0 site, and the only thing distinguishing you from the competition is that you're YC-funded and have a cool name, eventually the market is going to realize that you have no clothes -- so you should either sell out as soon as possible or work hard on building something which is superior to the competition for reasons other than coolness. Google became popular because it was cool; but it stayed popular because it was technically superior to the competition.
If, on the other hand, you're building yet another web 2.0 site, and the only thing distinguishing you from the competition is that you're YC-funded and have a cool name, eventually the market is going to realize that you have no clothes -- so you should either sell out as soon as possible or work hard on building something which is superior to the competition for reasons other than coolness. Google became popular because it was cool; but it stayed popular because it was technically superior to the competition.