Ex-Kalshi Team Launches $35 Million Fund for Prediction Market Development

A group of former employees from the regulated prediction market platform Kalshi is seeking to raise up to $35 million to establish 5c(c) Capital. This fund aims to invest in startups that develop market-making tools, indices, and infrastructure for the growing prediction market sector.

Key Takeaways

Fund Launch: Ex-employees of Kalshi are creating a fund named 5c(c) Capital to raise up to $35 million.
Focus Areas: The fund will target investments in market makers, index design, and infrastructure for event-driven trading.
Market Growth: Prediction markets like Kalshi and Polymarket are experiencing significant trading volumes and institutional interest.
Investors: The fund has backing from major industry figures, including the CEOs of Kalshi and Polymarket.
Investment Strategy: The goal is to support around 20 startups, emphasizing specialized tools over consumer-facing platforms.

Prediction market infrastructure fund 5c(c) announcement graphic

Main Content

Two former members of the Kalshi team are in the process of raising a fund that could reach up to $35 million, dedicated to enhancing the growing prediction market landscape. Known as 5c(c) Capital, this new venture aims to support around 20 startups over the next two years by investing in market makers, index design, and key infrastructure for event-driven trading. This initiative comes at a time when established platforms such as Kalshi and Polymarket are experiencing persistent double-digit billion monthly trading volumes, increasingly attracting institutional investors.

The fund has already garnered support from notable industry leaders such as Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan. Additional backing has come from investors associated with firms like Andreessen Horowitz, Ribbit Capital, and Multicoin Capital, as reported by ChainCatcher. This collaboration is particularly noteworthy given the competitive history between the two founders, with Coplan having previously referred to Kalshi as “a Polymarket copycat” during public discussions, highlighting the rivalry in liquidity, listings, and regulatory landscapes.

This timing illustrates the evolution of prediction markets from a speculative niche to an essential element of the financial ecosystem. In February, Kalshi recorded approximately $9.8 billion in trading activity, surpassing Polymarket’s roughly $7.6 billion, contributing to a total of $23.4 billion across the sector, as revealed by recent market analysis. On both platforms, short-term contracts based on major cryptocurrency assets have become dominant, blurring the lines between hedging and high-frequency betting.

This expansion has drawn major venture capital and liquidity-focused firms looking for innovative methods to evaluate political risk, macroeconomic data, and volatility in digital assets. By focusing on market-making, indices, and tools rather than consumer-oriented platforms, 5c(c) Capital is effectively betting on the future structure of prediction markets evolving akin to an exchange ecosystem, with a limited number of front-end platforms supported by a robust layer of specialized infrastructure. If the fund meets its target of $35 million and invests in 20 startups, the average investment size would be in the mid-single-digit millions. This approach would provide critical support for the next generation of teams developing liquidity engines, risk management systems, and structured products tailored for event-driven trading.

Through ongoing analysis of five-minute crypto contracts on Polymarket and Kalshi, as well as insights into February’s $23.4 billion prediction volume and venture capital influx into event-driven trading platforms, the future looks promising for this evolving market.