Y Combinator alum launched a new $34M fund dedicated to YC startups, backed by Garry Tan

Investing in Y Combinator startups can lead to significant returns to investors.

“If you look at the data: 6% of YC companies become unicorns, and of that 6% a quarter become decacorns,” Kulveer Taggar told TechCrunch. Taggar is a two-time YC alum best known for founding Zeus Living, a property management startup that raised over $150 million in funding, 

Taggar is so confident in the continuing return potential offered by the famed accelerator that he established Phosphor Capital, a venture firm dedicated solely to investing in YC companies. Since launching last year, Phosphor has raised $34 million in capital across two funds.

While Phosphor isn’t the only venture capital firm focused on YC startups—Pioneer Fund and Rebel Fund employ similar strategies—the firm is the only dedicated YC fund led by a solo General Partner. And because of Taggar’s long relationship with YC, he also nabbed YC CEO Garry Tan as an investor in the fund, he says.

Taggar’s relationship with Y Combinator began in 2007 when he, his cousin Harj Taggar, and future Stripe founders Patrick and John Collison, brought their startup, Auctomatic, through the program. Although Auctomatic was sold just a year later, that experience was key to forging a strong connection with the top accelerator. 

He went through Y Combinator in 2011, this time with Zeus Living, a startup that bought homes to offer furnished accommodations with flexible terms for business and personal travel. Initialized Capital, co-founded by current YC chief Garry Tan, led Zeus Living’s Series A funding and joined its board. 

At its peak, the startup was valued at over $200 million and had an annual revenue run rate of about $120 million, according to Taggar. 

However, Zeus encountered significant headwinds when interest rates surged earlier this decade and the startup was sold to competitor Blueground in late 2023 for undisclosed terms.

Taggar launched Phosphor mere months after leaving Zeus. He told TechCrunch he was particularly excited by the opportunity to invest in young AI startups and by Garry Tan’s leadership of the prestigious accelerator. “You could view this as a bet on Garry. I think he is taking Y Combinator to new levels,” Taggar said.

Unlike many emerging managers, Taggar had a relatively easy time raising capital. Beyond Tan, he says his other LPs include Zeus’s investors. “I had a relationship with them and a track record, so they knew me, and they knew how hard I work,” he said. 

Others include family offices and a large asset manager who are taking a bet on Taggar in large part because of his deep connection and long-standing ties to Y Combinator.

“Kulveer is what you might call an OG alum from the early days of YC,” said YC partner Jared Friedman. “He’s close to me and to many of the folks who now run YC.”

Taggar’s background as a YC alum and a founder was also a part of the draw to Phosphor for LPs. “Zeus was a really hard company to run. He has a tremendous number of battle scars from doing this hard thing in the physical world,” Friedman said. “I hear this from founders that he has incredible empathy for what they are going through, because he went through it all himself.”

Phosphor writes checks ranging from $100 million to $500 million. The firm has already backed over 200 YC companies, with several going on to raise Series A funding, including workflow automation platform Gumloop and AI meeting manager Circleback.