Team Startupcity

• YC alum Kulveer Taggar launched Phosphor Capital, raising $34 million to exclusively invest in Y Combinator startups.
• Phosphor is the only YC-focused fund led by a solo GP, backed by prominent investors including YC CEO Garry Tan.
• Taggar’s deep YC roots and startup experience offer unique empathy and value to founders, especially in emerging areas like AI.

Investing in Y Combinator startups is proving to be a lucrative strategy, with around 6% of YC-backed companies turning into unicorns and a quarter of those reaching decacorn status. Riding on this compelling trend, YC alum Kulveer Taggar has launched Phosphor Capital, a venture firm solely dedicated to backing Y Combinator startups. Since its launch last year, Phosphor has raised $34 million across two funds.

Taggar, a two-time Y Combinator alumnus and the founder of Zeus Living, created Phosphor to capitalize on what he sees as the ongoing and future potential of YC’s startup pipeline. “You could view this as a bet on Garry [Tan]”, he told TechCrunch, referring to Y Combinator's current CEO. “I think he is taking Y Combinator to new levels”.

Phosphor stands apart in a growing field of YC-focused VC firms, such as Pioneer Fund and Rebel Fund. What makes Phosphor unique is that it is the only dedicated Y Combinator fund led by a solo general partner. Taggar’s long-standing relationship with YC also paid off, as YC CEO Garry Tan personally invested in the fund.

Taggar’s deep ties with Y Combinator date back to 2007, when he co-founded Auctomatic with his cousin Harj Taggar and future Stripe founders Patrick and John Collison. That startup was acquired just a year later, but the YC experience cemented Taggar’s bond with the accelerator.

He returned to YC in 2011 with Zeus Living, a startup offering fully furnished, flexible-term rental accommodations. At its peak, Zeus was valued at over $200 million with a $120 million annual revenue run rate. Despite its strong performance, the company faced significant challenges due to surging interest rates and was acquired by competitor Blueground in late 2023.

Taggar launched Phosphor shortly after his exit from Zeus, leveraging not just his experience but also his network. His LPs include former investors in Zeus, family offices, and a large asset manager. “I had a relationship with them and a track record, so they knew me, and they knew how hard I work”, Taggar shared.

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Beyond capital, what sets Phosphor apart is Taggar’s founder-first perspective. YC partner Jared Friedman described Taggar as 'an OG alum from the early days of YC' and highlighted the value of his real-world experience. “Zeus was a really hard company to run. He has a tremendous number of battle scars... He has incredible empathy for what [founders] are going through".

Taggar’s focus is particularly sharp on emerging AI startups, viewing them as a core part of the next wave of transformative YC companies. With Garry Tan at the helm of Y Combinator and an increasingly ambitious batch of founders, Taggar believes the opportunity for returns has never been greater.

By betting on YC and its growing influence, Phosphor Capital aims to cement its position at the heart of Silicon Valley’s most prolific startup engine.