Kalshi and Polymarket founders back first VC fund dedicated to prediction markets
What's the deal? A new venture capital fund called 5c(c) Capital is launching with a focus on the prediction markets industry — believed to be the first fund dedicated to the sector. The fund plans to raise up to $35 million and back around 20 companies over the next two years. It is named after the section of the Commodity Exchange Act that governs prediction markets.
The fund's founders — Adhi RajaprabhakaranDealroom has a profile for this one. Try Dealroom → and Noah Zingler-SternigDealroom has a profile for this one. Try Dealroom →, both former Kalshi executives — have secured backing from a notable list of investors, including Kalshi's own chief executive Tarek MansourDealroom has a profile for this one. Try Dealroom → and Polymarket founder Shayne CoplanDealroom has a profile for this one. Try Dealroom →. Marc AndreessenDealroom has a profile for this one. Try Dealroom → and other Andreessen Horowitz leaders are also participating through a separate fund.
Why now? Prediction markets have grown rapidly, with platforms like Kalshi and Polymarket attracting large trading volumes across elections, sports, and other real-world events. The fund's founders argue the industry is still early — sports have dominated trading over the past year, but they see far larger opportunities ahead, forecasting the industry could eventually reach $10 trillion in trading volume. The joint backing of Mansour and Coplan is particularly striking given they are otherwise fierce rivals.
The regulatory environment has also shifted in the sector's favour. The Commodity Futures Trading Commission (CFTC), under its new chair Michael Selig, has backed prediction market exchanges in their legal battles against state gaming regulators who have argued the platforms offer unlicensed sports gambling.
What could go wrong? The fund is small — $35 million — and investing in a nascent, contested category. Legal uncertainty remains a real risk: state regulators have not conceded the argument, and the outcome of ongoing court battles could significantly constrain what prediction market platforms are permitted to offer. A change in CFTC leadership or political priorities could also shift the regulatory landscape.
The prediction market space is also still proving itself commercially. While trading volumes have grown, the monetisation models for many platforms remain immature, and the fund's thesis depends on a long chain of second- and third-order effects materialising.
The signal: 5c(c) Capital's launch signals that prediction markets are moving from a curiosity to an investable category with its own dedicated capital. The involvement of the sector's two biggest platform founders — competitors backing the same fund — suggests a shared belief that the infrastructure layer around prediction markets is where the next wave of value will be created.
Trading firms, analytics platforms, and data providers that serve the exchanges could prove more durable businesses than the exchanges themselves. If the $10 trillion volume forecast is even directionally right, the infrastructure bet looks compelling.
A.M.
