Investing in Y Combinator startups can result in important returns to traders.
“In case you have a look at the information: 6% of YC firms change into unicorns, and of that 6% 1 / 4 change into decacorns,” Kulveer Taggar advised 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 supplied by the famed accelerator that he established Phosphor Capital, a enterprise agency devoted solely to investing in YC firms. Since launching final 12 months, 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 related methods — the agency is the one devoted YC fund led by a solo basic companion. 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 means of this system. Though Auctomatic was bought only a 12 months later, that have was key to forging a powerful reference to the highest accelerator.
He went by means of Y Combinator once more in 2011, this time with Zeus Dwelling, a startup that purchased properties 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 Collection A funding and Tan joined its board.
At its peak, the startup was valued at over $200 million and had an annual income run price of about $120 million, based on Taggar.
Nonetheless, 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 advised TechCrunch he was significantly excited by the chance to spend money on younger AI startups and by Garry Tan’s management of the distinguished accelerator. “You would view this as a wager on Garry. I feel he’s taking Y Combinator to new ranges,” Taggar mentioned.
In contrast to many rising managers, Taggar had a comparatively simple time elevating capital. Past Tan, he says his different LPs embody Zeus’ traders. “I had a relationship with them and a monitor file, in order that they knew me, and so they knew how exhausting I work,” he mentioned.
Others embody household places of work 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,” mentioned YC companion Jared Friedman. “He’s near me and to lots of the of us 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 exhausting firm to run. He has an amazing variety of battle scars from doing this tough factor within the bodily world,” Friedman mentioned. “I hear this from founders that he has unbelievable empathy for what they’re going by means of, as a result of he went by means of 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 Collection A funding, together with workflow automation platform Gumloop and AI assembly supervisor Circleback.
