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 again 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 Tan 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’ 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.
