Y Combinator Graduate Unveils $34M Fund Exclusively for YC Startups, Backed by Garry Tan

Investing in startups from Y Combinator offers significant potential returns for investors.

“Based on the statistics: 6% of YC companies reach unicorn status, and among that group, a quarter attain decacorn status,” Kulveer Taggar disclosed to TechCrunch. A two-time YC alum, Taggar is well-known for founding Zeus Living, a property management startup that garnered over $150 million in funding.

Taggar’s belief in the continuing opportunities for returns from the prestigious accelerator inspired him to create Phosphor Capital, a venture firm dedicated to investing in YC companies. Since launching last year, Phosphor has successfully raised $34 million across two funds.

While Phosphor is not the only venture capital firm focusing on YC startups—others such as Pioneer Fund and Rebel Fund adopt similar strategies—it remains the sole dedicated YC fund with a single general partner. Due to Taggar’s long-standing relationship with YC, he also secured YC CEO Garry Tan as an investor in the fund.

Taggar’s connection with Y Combinator began in 2007 when he, alongside his cousin Harj Taggar and future Stripe founders Patrick and John Collison, took part in the program with their startup Auctomatic. Although Auctomatic was sold within a year, that experience was pivotal in forging a strong bond with the leading accelerator.

He returned to Y Combinator in 2011 with Zeus Living, a business that purchased homes to offer furnished accommodations with flexible options for both professional and personal travel. Initialized Capital, co-founded by current YC chief Garry Tan, spearheaded Zeus Living’s Series A funding, with Tan joining the board.

At its peak valuation, Taggar mentioned that the startup was valued at over $200 million, with an annual revenue run rate close to $120 million.

However, Zeus encountered significant hurdles due to rising interest rates earlier in the decade, culminating in its sale to competitor Blueground in late 2023 for undisclosed terms.

Taggar founded Phosphor just months after departing from Zeus. In a conversation with TechCrunch, he expressed excitement about the opportunity to invest in upcoming AI startups and praised Garry Tan’s leadership at the celebrated accelerator. “This could be seen as a bet on Garry. I believe he is taking Y Combinator to new heights,” Taggar stated.

In contrast to many new managers, Taggar found it relatively easy to raise capital. Beyond Tan, he highlighted that many of his other LPs were investors in Zeus. “I had built a relationship with them and had a solid track record, so they were aware of my work ethic,” he explained.

Additional investors include family offices and a prominent asset manager, who are backing Taggar largely because of his strong ties and long-standing relationships with Y Combinator.

“Kulveer is regarded as an OG alum from the early days of YC,” noted YC partner Jared Friedman. “He maintains close connections with many of the people now leading YC.”

Taggar’s background as a YC alum and founder has also drawn LPs to Phosphor and serves as a benefit for entrepreneurs. “Zeus was an exceptionally challenging company to manage. He carries many battle scars from navigating this tough landscape,” Friedman observed. “Founders tell me he has an extraordinary empathy for their struggles because he has gone through it all himself.”

Phosphor’s investments range from $100,000 to $500,000. The firm has already supported over 200 YC companies, several of which have advanced to secure Series A funding, including the workflow automation platform Gumloop and the AI meeting manager Circleback.