The CEOs of Kalshi and Polymarket both invested in the same prediction market VC fund.

This is a signal that prediction markets are moving from product competition into the ecosystem development stage.

Author: Fortune

Translation: Deep潮 TechFlow

Deep潮 Guide: Two competing prediction market CEOs, both fighting fiercely, appear on the same LP list. The fund named 5c© Capital was founded by two early employees of Kalshi, aiming to raise $35 million, focusing on prediction market infrastructure. Investors include Marc Andreessen, founder of Ribbit Capital, and former managing partner of Multicoin Capital—this signals that prediction markets are entering the ecosystem development phase.

Full text below:

The CEOs of Kalshi and Polymarket are fiercely competing to lead the hot prediction market sector. But in at least one aspect, they have set aside competition and invested in a new venture capital fund founded by two early Kalshi employees. According to a fundraising document seen by Fortune, the fund named 5c© Capital is raising up to $35 million to invest in prediction market startups.

This new VC’s name is derived from a clause in legislation regulating commodities and derivatives at the federal level, which now also includes prediction markets. The fund’s partners are Adhi Rajaprabhakaran— the second trader hired by Kalshi’s market maker—and Noah Zingler-Sternig, former operations head at Kalshi.

Besides Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan, the document shows early supporters of the fund include a star-studded list of venture investors: venture giant Marc Andreessen via the fund Moneta Luna; fintech investor Micky Malka, founder of Ribbit Capital; and Kyle Samani, former managing partner of crypto VC Multicoin Capital.

Rajaprabhakaran, one of the founding partners of 5c© Capital, declined to comment. A spokesperson for Andreessen Horowitz also declined to comment. Polymarket and Malka did not immediately respond to requests for comment.

A Kalshi spokesperson confirmed Mansour’s involvement. “Adhi understands that building prediction market infrastructure in the coming years will be crucial,” Samani said in a statement, confirming his support for 5c© Capital.

Prediction Market Boom

The fundraising by these two early Kalshi employees coincides with prediction markets becoming one of Silicon Valley’s hottest sectors. Kalshi is raising $1 billion at a $22 billion valuation, led by seasoned Silicon Valley investor Coatue Management. Its competitor Polymarket is also seeking a valuation of around $20 billion. Both platforms allow users to bet on various topics, from Bitcoin or Ethereum price movements to NCAA basketball tournament winners.

Amid the investment frenzy, state governments are also trying to curb the rise of prediction markets, especially after Kalshi and Polymarket opened platforms for sports betting. Regulators see these prediction markets as essentially sports gambling venues subject to strict state laws. Kalshi faces about 20 federal lawsuits questioning its legality. Last week, Arizona’s attorney general also filed criminal charges against the startup.

Kalshi and the US trading platform Polymarket, which is not yet live, both argue that prediction markets are fundamentally different from sports betting, and that the CFTC’s federal regulatory authority supersedes state powers.

Despite the legal challenges, the fundraising document for 5c© Capital describes prediction markets as “a once-in-a-generation investment opportunity.” The two partners plan to invest in about 20 companies over the next two years, including market makers and prediction market index designers.

The fund aims to close its first round within a month.

“Adhi is a talented investor, and we’re excited to support him,” said Elena Silenok, founder and managing partner of Moneta Luna, Marc Andreessen’s investment vehicle.