Investing in Y Combinator startups has consistently proven to be one of the most promising paths to outsized returns.
“If you look at the data: 6% of YC companies become unicorns, and of that 6%, a quarter become decacorns,” Kulveer Taggar told. Taggar, a two-time YC alum, is perhaps best known for founding Zeus Living, the property management startup that raised over $150 million in funding.
Taggar believes so strongly in the continued potential of YC-backed startups that he’s launched Phosphor Capital, a venture firm focused exclusively on investing in them. Since its debut last year, Phosphor has raised $34 million across two funds.
While Phosphor isn’t the only fund dedicated to this niche—Pioneer Fund and Rebel Fund follow similar strategies—it stands out as the only YC-focused firm led by a solo general partner. And thanks to Taggar’s long-standing ties with Y Combinator, he was able to bring YC CEO Garry Tan on board as an investor in the fund.
Taggar’s journey with YC goes all the way back to 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 acquired a year later, that experience cemented his connection with the accelerator.
He returned to YC in 2011 with Zeus Living, which purchased homes and offered furnished rentals with flexible terms for business travelers and individuals. Initialized Capital, co-founded by Garry Tan, led Zeus Living’s Series A round, and Tan joined the board.
At its peak, Zeus was valued at more than $200 million, with an annual revenue run rate of about $120 million, according to Taggar.
However, the company faced steep challenges when interest rates surged earlier this decade. In late 2023, Zeus was sold to competitor Blueground for undisclosed terms.
Just months after stepping away from Zeus, Taggar launched Phosphor Capital. He said he felt energized by the opportunity to back early-stage AI startups and inspired by Garry Tan’s leadership of YC.
“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 who struggle to raise their first funds, Taggar found the process relatively smooth. In addition to Tan, many of his limited partners were Zeus investors who already trusted him.
“I had a relationship with them and a track record, so they knew me, and they knew how hard I work,” he said.
Other backers include family offices and a large asset manager willing to bet on Taggar’s experience and deep YC ties.
“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.”
For LPs and founders alike, Taggar’s experience as both a YC alum and a founder was a key draw.
“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’re going through because he went through it all himself.”
Phosphor writes checks ranging from $100,000 to $500,000. So far, the firm has invested in more than 200 YC companies. Several have already advanced to Series A rounds, including workflow automation startup Gumloop and AI meeting manager Circleback.
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