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Investing in Y Combinator startups can result in important returns to traders.
“In case you have a look at the info: 6% of YC corporations turn into unicorns, and of that 6% 1 / 4 turn into decacorns,” Kulveer Taggar advised Trendster. Taggar is a two-time YC alum greatest recognized 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 corporations. 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 normal 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 offered only a 12 months later, that have was key to forging a robust 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 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 price of about $120 million, in accordance with Taggar.
Nonetheless, Zeus encountered important headwinds when rates of interest surged earlier this decade and the startup was offered to competitor Blueground in late 2023 for undisclosed phrases.
Taggar launched Phosphor mere months after leaving Zeus. He advised Trendster he was notably excited by the chance to spend money on younger AI startups and by Garry Tan’s management of the celebrated accelerator. “You could possibly view this as a guess on Garry. I feel he takes Y Combinator to new ranges,” Taggar stated.
In contrast to many rising managers, Taggar had a comparatively simple time elevating capital. Past Tan, he says his different LPs embrace Zeus’ traders. “I had a relationship with them and a observe report, in order that they knew me, and so they knew how laborious I work,” he stated.
Others embrace household places of work and a big asset supervisor who’re taking a guess on Taggar largely due to his deep connection and long-standing ties to Y Combinator.
“Kulveer is what you may name an OG alum from the early days of YC,” stated YC companion 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 extremely 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 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 corporations, with a number of occurring to lift Sequence A funding, together with workflow automation platform Gumloop and AI assembly supervisor Circleback.
