Author: Fortune

Translated by: TechFlow

TechFlow Guide: Two CEOs of fiercely competing prediction markets have appeared on the same LP list. This fund named 5c (c) Capital was founded by two early employees of Kalshi and aims to raise $35 million, specifically investing in prediction market infrastructure. Marc Andreessen, founder of Ribbit Capital, and former managing partner of Multicoin Capital are also on the investor list—this is a signal that the prediction market is transitioning from product competition to ecological construction phase.

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The CEOs of Kalshi and Polymarket are competing fiercely for dominance in the hot prediction market sector. But in at least one regard, both sides have put aside competition, each investing in a budding venture capital fund founded by two early employees of Kalshi. A fundraising document seen by Fortune shows that the fund is named 5c (c) Capital, which is raising up to $35 million to invest in prediction market startups.

The name of this new venture capital firm comes from a provision in legislation regarding federal regulation of commodities and derivatives, which now includes prediction markets. The fund’s partners are Adhi Rajaprabhakaran—the second trader hired by Kalshi’s associated market maker—and Noah Zingler-Sternig, former head of operations at Kalshi.

Besides Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan, the document reveals that the fund's early backers also include a number of prominent venture capitalists: venture capital giant Marc Andreessen participates through the fund Moneta Luna; financial technology investment firm Ribbit Capital founder Micky Malka; and former managing partner of cryptocurrency VC Multicoin Capital Kyle Samani.

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

A spokesperson for Kalshi confirmed Mansour’s involvement. "Adhi knows that the next few years are crucial for building the surrounding infrastructure of prediction markets," Samani stated in a declaration, confirming his support for 5c (c) Capital.

The Prediction Market Frenzy

The fundraising being conducted by these two early Kalshi employees comes at a time when prediction markets have become one of the hottest sectors in Silicon Valley. Kalshi is raising $1 billion at a valuation of $22 billion, led by seasoned Silicon Valley investment firm Coatue Management. Its competitor Polymarket is also seeking a similar valuation of around $20 billion. These two trading platforms allow users to bet on a variety of topics, from the price movements of Bitcoin or Ethereum to the outcome of the NCAA basketball championship.

While investor enthusiasm is high, state governments are trying to suppress the rise of prediction markets, especially after Kalshi and Polymarket opened their platforms to the sports market. Regulators view these two prediction markets as merely sports betting venues that must comply with strict state laws. Kalshi is facing about 20 federal lawsuits questioning its legality. Last week, the Arizona Attorney General also filed criminal charges against this startup.

Kalshi and Polymarket, which has not yet launched in the U.S., both argue that prediction markets are fundamentally different from sports betting, and that federal regulatory authority holds sway over state power according to the CFTC.

Despite the tough legal landscape, 5c (c) Capital's fundraising document still describes prediction markets as "an investment opportunity of a generation." The two partners plan to invest in about 20 companies over the next two years, including categories like prediction market market makers and prediction market index designers.

This venture fund will complete its initial closing within a month.

"Adhi is a talented investor, and we are pleased to support him," said Elena Silenok, founder and managing partner of Marc Andreessen's investment channel Moneta Luna.