Kalshi and Polymarket Join Forces to Fund New Initiative, a Major Step Toward Prediction Market "Ecosystem Development"

Original | Odaily Planet Daily (@OdailyChina)

Author | Wenser (@wenser 2010)

Behind the soaring trading volume in prediction markets, their ecosystem is also expanding rapidly.

Yesterday, a venture capital firm founded by two former Kalshi employees, 5c© Capital, announced its latest fundraising plan to raise $35 million for investments in prediction market startups. Notably, the firm has garnered support from Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan, along with other investors including a16z, Ribbit Capital, and Multicoin Capital.

At the same time, this is the first venture capital firm solely focused on investing in the prediction market industry, and it is also the same entity investing in the two giants of prediction markets, Kalshi and Polymarket—an unprecedented move in the industry. Combining this with previous news about Kalshi launching a prediction market alliance, planning to hold a prediction market conference, Polymarket opening LP market-making incentives, and various prediction market data platforms emerging in the market, it’s clear that prediction markets are gradually breaking away from the native crypto space and becoming an independent emerging industry ecosystem.

When a sector’s trading volume multiplies dozens of times within a year, and when a platform’s monthly trading volume can match the entire industry’s volume from just a few months ago, prediction markets are invading the traditional betting platforms with unstoppable momentum.

Polymarket CEO, a former Kalshi employee, on investing in Kalshi: The joint choice of the two prediction market giants

It is understood that the name of 5c© Capital is derived from the prediction market provisions in the U.S. Commodity Exchange Act.

The two founders are veteran figures from Kalshi—Adhi Rajaprabhakaran was the No.2 trader in Kalshi’s market-making division, Kalshi Trading, and is also the creator of the well-known prediction market podcast “50 Cent Dollars”; Noah Zingler-Sternig served as Kalshi’s COO-like operations head and led Kalshi’s integration with Robinhood Markets Inc.

Additionally, the fund plans to invest in about 20 companies over the next two years, focusing on market-making, index design, and other infrastructure related to prediction markets. Its first round of funding is expected to close within the next month.

A Luxurious Lineup of Investors: Spanning Traditional VCs, Crypto VCs, Prediction Markets, and Sports Betting Platforms

Besides confirmed investors like Kalshi CEO Tarek Mansour and the unconfirmed Polymarket CEO Shayne Coplan, the other investors in 5c© Capital form a “luxury lineup”—including seasoned venture capitalists like Marc Andreessen of A16z (who invested through the Moneta Luna fund), Ribbit Capital founder Micky Malka, former Multicoin Capital managing partner Kyle Samani, as well as industry insiders like hedge fund manager Millennium (with over $70 billion AUM) and founders of prediction market platform PredictIt.

If the above list is more about strategic interests from VC firms, the actions of two other participants are more aligned with industry demand behaviors similar to Polymarket and Kalshi. It is reported that Jeremy Levine, CEO of fantasy sports platform Underdog, and Jacob Fortinsky, CEO of sports prediction platform Novig, are also on the list.

It’s evident that as the industry develops rapidly, prediction market platforms and even traditional sports betting platforms are exploring ways to solidify their foundations.

The Ambitions of New Prediction Market Funds: Industry Trading Volume Could Reach $10 Trillion in the Future

Notably, the two founders of 5c© Capital mentioned two key points in their investment document:

First, they explicitly stated, “We hope to leverage our own constructed (product platforms) to create more secondary, tertiary, and even quaternary effects.” From their words, it’s clear they are targeting not only primary investments in prediction market platforms but also capital investments, risk management, equity trading, and liquidity attraction and inflow across various niche sectors generated by prediction markets.

Second, regarding the future industry development, the document states, “Currently, prediction markets seem limited to sports, but this is only part of the industry. In the future, the industry’s trading volume could reach $10 trillion.”

At least, recent platform operational data from Kalshi may support this outlook: as of March 22, Kalshi’s monthly nominal trading volume exceeded $9 billion. At this rate, Kalshi’s March trading volume will surpass $12.7 billion, a 21.5% month-over-month increase. For comparison, Kalshi’s annual nominal trading volume in 2025 is projected to be around $23.8 billion, meaning that just in one month (March), Kalshi’s trading volume could reach about 53.4% of last year’s total. Moreover, the overall prediction market industry’s trading volume was around $10 billion last October, and now, Kalshi alone has already exceeded that figure.

Previously, Odaily Planet Daily predicted in multiple articles that prediction markets would become an independent trillion-dollar industry separate from the crypto market. It now appears that this prophecy is gradually coming true.

Prediction markets becoming an independent ecosystem: funds, industry alliances, data services, APIs forming a closed loop

In the current era where AI is a major driver of the global economy, prediction markets are another rapidly growing sector, and their closed-loop ecosystem is also quickly maturing.

Apart from the $35 million industry fund mentioned earlier, the prediction market industry is actively building its foundational infrastructure, industry organizations, and application platforms.

In December last year, Coinbase announced the acquisition of The Clearing Company, a prediction market platform founded by former Kalshi and Polymarket employees. Although the specific amount was not disclosed, the company had previously completed a $15 million seed round and is considered one of the rising challengers in the industry.

Around the same time, Kalshi, Crypto.com, Robinhood, Coinbase, and Underdog jointly announced the formation of the Prediction Market Alliance (the Coalition for Prediction Markets, CPM). Recommended reading: “Kalshi forms alliance with Coinbase, Robinhood, aiming to end ‘casino theory’”.

At the end of last year, Kalshi CEO and co-CEO Tarek Mansour issued a call to host the first Prediction Market Conference by March 2026, where researchers, economists, policymakers, and traders will discuss core issues around prediction markets and knowledge aggregation.

In February this year, Polymarket publicly announced its second official acquisition—predicting the purchase of prediction market API startup Dome, a YC-backed project incubated in fall 2025, providing a unified prediction market API to help developers build applications, trading bots, and data dashboards that connect to multiple platforms like Polymarket and Kalshi. Dome had previously received $5 million from YC and completed a $4.7 million seed round. Its first acquisition was of US-licensed derivatives exchange QCEX, helping Polymarket re-enter the US market.

As industry trading volumes grow, data analysis platforms for prediction markets are emerging rapidly, including Parity, Predictefy, and KalshiData.

Additionally, on-chain trading tools and AI agent trading tools for Polymarket are numerous, such as Insiders.bot, Hubble AI, and Alchemy’s AgentCard.

It’s no exaggeration to say that the upstream, midstream, and downstream of prediction markets are full of investment and entrepreneurial opportunities. We will further explore these in the upcoming series “Crypto Bear Market Startup Guide.”

The trend is set; we await the bloom

Previously, Kalshi was valued at $22 billion, making it the most valuable prediction market platform, surpassing traditional sports betting giants like FanDuel (Flutter, $19 billion), DraftKings ($12.75 billion), and bet365 ($12 billion).

Moreover, CFTC Chairman Mike Selig has previously stated that prediction markets could become “truth machines,” and is working on regulations and hiring related personnel. It’s clear that prediction markets are no longer niche sectors within crypto but are emerging as a major benchmark industry in the golden age of the US financial markets.

Although there are reports that US lawmakers may propose bipartisan legislation to ban prediction markets like Polymarket and Kalshi from predicting sports events, this is also a sign of prediction markets moving from the fringe to the mainstream.

After all, a survey shows that over 36% of American voters are users of prediction market platforms, and the rising monthly trading volumes of Kalshi and Polymarket are hard to ignore.

Recommended Reading

Why prediction markets are really not gambling platforms

The future battle of prediction markets: casinos on the left, news on the right

Not enough? Prediction market giants eye payments and AI opportunities

2025 Prediction Market Review: Total trading volume exceeds $50 billion, with the two giants holding over 97.5% of the market share