Kalshi and Polymarket return $35 million in funding as prediction markets rise despite regulatory pressure

Two former Kalshi employees are raising up to $35 million in capital for 5c(c), a fund aimed at supporting startups building around predictive markets, Fortune reports.

The fund has attracted unusual support from competitors and senior investors. Backers include Kalshi CEO Tarek Mansour and Polymarket CEO Shane Coplan, along with venture capitalists such as Marc Andreessen at Moneta Luna, Rabbitbit Capital founder Mickey Malka and former Multicoin managing partner Kyle Samani.

5c(c) Capital is led by Adhi Rajaprabhakaran, an early trader associated with Kalshi's sourcing operations, and Noah Zingler Sternig, the firm's former executive. The name now refers to a section of the federal Commodities and Derivatives Regulation that includes the category of futures markets.

The fund plans to invest in around 20 companies over the next two years, targeting areas such as market execution, predictive market indices and broader infrastructure. The first closing is expected within the next month.

Startup prediction markets have emerged as one of the most talked about sectors in Silicon Valley. Kalshi is reportedly raising $1 billion at a $22 billion valuation, while Polymarket is targeting a valuation of around $20 billion, underscoring the extent of investor interest in platforms that allow users to trade on real-world outcomes.

These platforms allow users to integrate everything from crypto price movements to major global events, integrating financial components, forecasting and speculation into a single market structure.

At the same time, the sector is under increasing pressure from regulators. State officials have raised concerns that prediction markets will resemble sports betting platforms and have to follow the same rules, arguing that the companies would fall under federal regulation as financial products.