Y Combinator alum launched a brand new $34M fund devoted to YC startups, backed by Garry Tan
Investing in Y Combinator startups can result in important returns to buyers.
“When you take a look at the information: 6% of YC firms grow to be unicorns, and of that 6% 1 / 4 grow to be decacorns,” Kulveer Taggar instructed TechCrunch. Taggar is a two-time YC alum greatest identified for founding Zeus Dwelling, a property administration startup that raised over $150 million in funding.
Taggar is so assured within the persevering with return potential provided by the famed accelerator that he established Phosphor Capital, a enterprise agency devoted solely to investing in YC firms. Since launching final yr, Phosphor has raised $34 million in capital throughout two funds.
Whereas Phosphor isn’t the one enterprise capital agency centered on YC startups — Pioneer Fund and Insurgent Fund make use of comparable methods — the agency is the one devoted YC fund led by a solo basic accomplice. And due to Taggar’s lengthy relationship with YC, he additionally nabbed YC CEO Garry Tan as an investor within the fund, he says.
Taggar’s relationship with Y Combinator started in 2007 when he, his cousin Harj Taggar, and future Stripe founders Patrick and John Collison introduced their startup, Auctomatic, by this system. Though Auctomatic was bought only a yr later, that have was key to forging a powerful reference to the highest accelerator.
He went by Y Combinator once more in 2011, this time with Zeus Dwelling, a startup that purchased houses to supply furnished lodging with versatile phrases for enterprise and private journey. Initialized Capital, co-founded by present YC chief Garry Tan, led Zeus Dwelling’s Sequence A funding and Tan joined its board.
At its peak, the startup was valued at over $200 million and had an annual income run fee of about $120 million, based on Taggar.
Nevertheless, Zeus encountered important headwinds when rates of interest surged earlier this decade and the startup was bought to competitor Blueground in late 2023 for undisclosed phrases.
Taggar launched Phosphor mere months after leaving Zeus. He instructed TechCrunch he was significantly excited by the chance to put money into younger AI startups and by Garry Tan’s management of the celebrated accelerator. “You might view this as a wager on Garry. I feel he takes Y Combinator to new ranges,” Taggar stated.
Not like many rising managers, Taggar had a comparatively straightforward time elevating capital. Past Tan, he says his different LPs embrace Zeus’ buyers. “I had a relationship with them and a observe document, in order that they knew me, and so they knew how laborious I work,” he stated.
Others embrace household workplaces and a big asset supervisor who’re taking a wager on Taggar largely due to his deep connection and long-standing ties to Y Combinator.
“Kulveer is what you would possibly name an OG alum from the early days of YC,” stated YC accomplice Jared Friedman. “He’s near me and to most of the people who now run YC.”
Taggar’s background as a YC alum and a founder was additionally part of the draw to Phosphor for LPs and a profit for founders. “Zeus was a very laborious firm to run. He has an amazing variety of battle scars from doing this tough factor within the bodily world,” Friedman stated. “I hear this from founders that he has unimaginable empathy for what they’re going by, as a result of he went by all of it himself.”
Phosphor writes checks starting from $100,000 to $500,000. The agency has already backed over 200 YC firms, with a number of occurring to boost Sequence A funding, together with workflow automation platform Gumloop and AI assembly supervisor Circleback.