Ex‑Kalshi veterans are putting together a new war chest for the fast‑evolving prediction market industry, targeting up to $35 million for a specialist venture fund designed to power the sector’s underlying infrastructure rather than its consumer‑facing platforms.
The vehicle, named 5c(c) Capital, is being launched by two of Kalshi’s earliest employees, according to a regulatory filing and people briefed on the raise. Over roughly the next two years, they plan to invest in about 20 young companies building the plumbing that makes event‑driven trading possible: market‑making firms, index providers, risk and pricing engines, and other core tools that sit behind the scenes.
Crucially, 5c(c) Capital has already attracted an unusually broad coalition of backers from across the prediction market landscape. Among its early supporters are Kalshi co‑founder and CEO Tarek Mansour and Polymarket CEO Shayne Coplan, as well as investors associated with large venture funds such as Andreessen Horowitz, Ribbit Capital, and Multicoin Capital, according to people familiar with the matter. That kind of cross‑platform alignment is notable given the sharp, often public rivalry between Kalshi and Polymarket as they vie for trading volume, listings, and regulatory advantage.
Coplan has previously derided Kalshi in interviews as little more than “a Polymarket copycat,” underscoring how contentious the competition has become. Yet both leaders are now effectively betting on the same thing: that the future of prediction markets will depend less on who controls the user interface and more on who builds the rails, liquidity systems, and analytical tooling underneath. One person involved in the fundraising effort, who was not authorized to speak on the record, described the shift succinctly: investors are no longer focused only on “the flagship venues,” but on “the rails and tools that make these markets possible.”
The launch of 5c(c) Capital comes at a moment when prediction markets are shedding their reputation as a quirky side show and instead starting to look like a serious component of global financial infrastructure. Recent industry research shows that February trading volume across major on‑chain and regulated platforms reached around $23.4 billion. Kalshi handled roughly $9.8 billion of that activity, edging out Polymarket’s approximately $7.6 billion for the month.
Much of this flow is concentrated in ultra‑short‑term contracts tied to the price swings of major cryptocurrencies. On both Kalshi and Polymarket, “up or down in five minutes” products on leading digital assets now account for the bulk of crypto‑linked trading. These hyper‑short tenors blur the line between hedging and high‑frequency speculation, attracting a mix of sophisticated traders and retail users who treat them as a form of rapid‑fire wagering on volatility.
The surge in volume has drawn in big‑name venture capital firms as well as professional liquidity providers that traditionally operated in equities, options, and foreign exchange. They see prediction markets as a new venue for pricing everything from macroeconomic releases and political outcomes to token prices and on‑chain activity. For these players, the real bottleneck is not user demand but the lack of robust, standardized infrastructure to support scale, compliance, and risk management.
5c(c) Capital is positioning itself squarely in that gap. Rather than backing yet another front‑end platform that fights for users and attention, the fund is targeting the layer that most traders never see: quantitative market makers, index construction specialists, pricing oracles, risk systems, automation tools, and settlement infrastructure. The expectation is that the industry will increasingly resemble a modern exchange stack, where a limited number of interfaces sit on top of a deep pool of specialized, interoperable services.
If 5c(c) Capital succeeds in hitting its $35 million target and spreads that capital across about 20 portfolio companies, its average investment size will land in the mid single‑digit millions of dollars. That is substantial enough to lead or co‑lead seed rounds for startups building liquidity engines, structured prediction products, margin and collateral tooling, or sophisticated analytics and routing systems for event‑driven strategies.
Behind the headline numbers is a broader structural shift: prediction markets are starting to integrate more tightly with the rest of the financial system. For institutional investors, they offer a way to express views on binary or discrete events-elections, rate decisions, regulatory actions, protocol upgrades-that are difficult to hedge using traditional derivatives. As these use cases mature, the demand for institutional‑grade infrastructure, from compliance frameworks to execution algorithms, increases accordingly.
One likely area of focus for a fund like 5c(c) Capital is market‑making technology. Continuous, deep liquidity is essential for any prediction venue to be usable at size. Startups building automated market makers optimized for binary and multi‑outcome markets, smarter order‑routing engines, and adaptive fee models are natural candidates for investment. Improving these pieces can reduce spreads, increase turnover, and make prediction markets more attractive to both professional and retail traders.
Index design is another pillar. Today, prediction markets often list individual questions-such as the probability of a specific election result or a particular economic outcome. Over time, those single markets may be bundled into indices that track broader themes: geopolitical risk baskets, regulatory risk composites, or volatility indices tied to events like policy meetings or major protocol votes. An ecosystem of specialized index providers could enable structured products that reference aggregated event risk, not just individual contracts.
Tooling and analytics sit alongside these developments. As volumes grow into the tens of billions of dollars per month, participants will need more advanced dashboards, historical datasets, backtesting environments, and risk‑management suites. Portfolio managers may want to treat prediction market exposure like any other asset class, aggregating risk across venues and products. That requires standardized APIs, cross‑platform data normalization, and robust monitoring tools-exactly the kind of software young infrastructure teams are trying to build.
The regulatory dimension adds further complexity and opportunity. Kalshi operates within a regulated framework in the United States, while other venues have taken more on‑chain or offshore approaches. As regulators clarify their stance on event contracts, political prediction markets, and short‑term payoff structures, there will be demand for compliance tooling, reporting systems, and legal engineering that allow platforms and liquidity providers to scale without constant friction. A fund focused on infrastructure is well placed to back startups that specialize in this interface between regulation and technology.
There is also an emerging overlap between prediction markets and algorithmic trading in crypto and traditional finance. Quantitative funds are experimenting with models that ingest prediction market odds as signals for broader macro or asset‑specific strategies. That, in turn, creates a feedback loop: better infrastructure produces cleaner markets with tighter pricing, which makes them more useful as informational inputs, further increasing institutional participation. Investment into this layer accelerates the cycle.
Looking ahead, proponents argue that prediction markets could evolve into a kind of global probability layer: a continuously updated, tradable feed of crowd‑priced expectations about the future. To reach that point, however, the sector must move beyond ad‑hoc, siloed products and develop shared standards for contracts, settlement, collateral, and risk. Funds like 5c(c) Capital are effectively betting that this maturation is not only possible but inevitable-and that the most durable value will accrue to the companies building the tools, rather than to the loudest brands on the surface.
For now, the story is one of transition. What began as a niche experiment in event betting is starting to resemble a fully fledged market infrastructure stack. With billions in monthly volume and growing institutional curiosity, the sector is at the stage where specialized venture capital can meaningfully influence its trajectory. By directing capital toward market makers, index designers, and core tooling, ex‑Kalshi insiders hope to ensure that prediction markets are not just popular, but structurally sound-and ready to plug into the broader financial system.