Ex-Kalshi veterans raise $35M fund to power prediction market infrastructure
Two early employees of regulated prediction market platform Kalshi are building a new venture fund designed specifically for the infrastructure layer of event‑driven trading. The fund, called 5c(c) Capital, is targeting up to $35 million in commitments, according to regulatory filings and people familiar with the raise.
Unlike consumer‑facing prediction venues, 5c(c) Capital wants to sit one layer deeper in the stack. Over the next two years, the fund plans to invest in around 20 startups that provide market‑making services, build indices, and develop core tools for prediction markets and event‑based derivatives. The thesis is simple: as prediction markets mature into a mainstream asset class, the biggest value may accrue not only to the platforms where users place bets, but also to the pipes, engines, and analytics that keep those markets liquid and usable.
The timing of the raise reflects how dramatically the sector has scaled over the past year. Regulated platforms like Kalshi and on‑chain venues such as Polymarket are now routinely processing double‑digit billions in monthly trading volume. Recent industry data shows that in February alone, prediction markets collectively handled about $23.4 billion in activity. Kalshi accounted for roughly $9.8 billion of that, edging ahead of Polymarket, which recorded close to $7.6 billion over the same period.
A large portion of this flow is now concentrated in ultra‑short‑term contracts, especially in crypto markets. Five‑minute “up or down” contracts on major digital assets have become one of the dominant products on both platforms. These instruments blur the boundary between sophisticated hedging tools and high‑frequency speculative betting, while demanding extremely robust market‑making, risk management, and settlement infrastructure behind the scenes.
5c(c) Capital has already attracted backing from some of the most prominent figures in the prediction market space. Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan are both investors in the vehicle, alongside individuals associated with well‑known venture firms including Andreessen Horowitz, Ribbit Capital, and Multicoin Capital, according to prior reporting.
That cross‑platform support is striking because the two founders have often been cast as direct rivals. Coplan has publicly criticized Kalshi as “a Polymarket copycat” as the firms compete on liquidity, listings, and regulatory positioning. Their joint support suggests a recognition that, regardless of which venue leads on the consumer side, both will rely heavily on a shared ecosystem of specialists providing pricing, technology, and structured products.
One person involved in the fundraise, who was not authorized to speak on the record, framed the shift this way: investors are no longer just betting on the marketplaces themselves, but on “the rails and tools that make these markets possible.” In other words, the sector is beginning to resemble traditional finance, where exchanges sit atop a complex network of clearing houses, prime brokers, data providers, and market‑making firms.
If 5c(c) Capital reaches its full $35 million target and spreads that across about 20 portfolio companies, average checks will likely land in the mid‑single‑digit millions. That’s enough to anchor early‑stage rounds for startups building liquidity engines, automated risk systems, standardized indices, and structured products tied to real‑world events. The fund’s backers are effectively betting that future prediction markets will trade everything from macroeconomic data and political outcomes to sports, weather, and corporate performance through a unified, institution‑grade infrastructure stack.
The rise of prediction markets as “financial plumbing” has also changed how larger investors view the space. What was once seen as a niche for crypto‑native speculators is increasingly being evaluated as a tool for pricing and transferring risk. Traditional market participants are exploring event contracts as a complementary way to manage exposure to elections, inflation prints, regulatory decisions, and volatility in digital assets. For these users, robustness, compliance, and reliable liquidity matter more than meme‑driven front ends.
By focusing on infrastructure instead of direct‑to‑consumer products, 5c(c) Capital is positioning itself to benefit from multiple possible futures. If one or two dominant venues win the prediction market “land grab,” they will still need external market makers, risk models, and index products. If instead the space fragments into many specialized platforms, shared infrastructure providers will become even more crucial, enabling interoperability and standardized pricing across disparate markets.
The index angle is particularly significant. Index design in prediction markets could mirror the evolution of equity and derivatives indices in traditional finance. Well‑constructed event indices-basket contracts tied to, for example, a group of election races, a collection of macro indicators, or a composite of crypto volatility events-would allow traders to express broad views without picking individual contract outcomes. Building, maintaining, and licensing those indices is a specialized business that requires both quantitative rigor and deep domain knowledge.
Core tooling is another critical piece of the puzzle. As volumes scale into the tens of billions per month, prediction platforms need far better data feeds, analytics dashboards, monitoring systems, and compliance software. Low‑latency oracles for on‑chain venues, standardized APIs for institutional connectivity, and risk engines that can handle correlated event outcomes are all areas ripe for focused startups. 5c(c) Capital appears intent on seeding exactly these types of companies.
There is also a regulatory dimension to the infrastructure bet. Kalshi operates as a regulated venue, while Polymarket runs on‑chain with a different legal posture. Regardless of model, both must increasingly demonstrate robust controls over market integrity, manipulation, and know‑your‑customer standards. Infrastructure providers that build tools to monitor suspicious activity, manage customer onboarding, and interface with regulators may find a growing pipeline of clients as more jurisdictions clarify their stance on event‑driven markets.
The fund’s emergence highlights an underlying convergence between crypto derivatives, prediction markets, and traditional financial engineering. Five‑minute contracts on bitcoin movements are functionally close to binary options; election markets share features with event futures that have existed on specialized exchanges for years. What’s changing is the scale, accessibility, and speed at which these contracts can be created, traded, and settled-driven by improved technology and deeper liquidity provision.
At the same time, there are open questions and risks. Critics argue that the growth of ultra‑short‑term prediction products can tilt the ecosystem toward pure gambling rather than information discovery. If infrastructure builders optimize solely for volume and engagement, they may reinforce speculative behaviors at the expense of the original vision of prediction markets as “truth‑seeking” mechanisms. Funds like 5c(c) Capital will likely face pressure-from both regulators and sophisticated investors-to support products that generate genuine price signals and risk‑transfer value, not just addictive trading loops.
For founders, however, the message from this new fund is clear: the window is open for companies that want to specialize. Instead of launching yet another front‑end prediction market, startups can build the invisible but essential components-liquidity algorithms, standardized contract templates, cross‑venue settlement systems, or even accounting and reporting tools tailored to event‑based instruments. A dedicated pool of capital that understands the space reduces the friction of getting those ideas funded.
In the broader context of digital assets, the formation of 5c(c) Capital is another sign that the industry is maturing beyond token launches and speculative narratives. As with the evolution of crypto exchanges and DeFi, the market is now rewarding teams that solve hard, unglamorous problems: latency, fragmentation, risk, and institutional usability. Prediction markets may still look like a frontier, but the money is starting to flow into the foundations rather than just the facades.
Whether 5c(c) Capital ultimately hits its full $35 million target or not, its existence underscores a shift in perception. Prediction markets are no longer viewed purely as experimental side projects; they are increasingly treated as a permanent fixture of the financial landscape, complete with their own dedicated infrastructure layer-and now, a fund built precisely to finance it.