(Bloomberg) - A new venture capital fund focused on prediction markets is launching with initial investments from a long list of prominent investors including two of the industry’s biggest players, Polymarket’s Shayne Coplan and Kalshi Inc.’s Tarek Mansour, according to an investment document viewed by Bloomberg News.
The investment firm, 5c(c) Capital, is named for the section of the Commodity Exchange Act related to prediction markets. It appears to be the first fund focused on the nascent industry, and underscores the rapid growth of exchanges like Kalshi and Polymarket, which have opened up betting on a wide array of real-world events, such as elections and sports.
“We want to capitalize on the second-, third-, and fourth-order effects of what we built ourselves,” the founders of the new fund, who both previously worked at Kalshi, wrote in the document.
5c(c) Capital is planning to raise up to $35 million with about 20 portfolio companies over the next two years, the document says.
A spokesperson for Kalshi confirmed that Mansour is involved. Polymarket did not immediately respond to a request for comment.
The joint participation of Mansour and Coplan is notable because the two have otherwise been fierce rivals.
The pitch document lists more than twenty prominent investors offering early support, including a portfolio manager at Millennium Management, several crypto-focused venture capital funds, and the founders of other prediction market companies such as PredictIt.
A representative for Millennium did not immediately respond to a request for comment.
Marc Andreessen, the founder of Andreessen Horowitz, invested through a separate fund, Moneta Luna, along with the other leaders of that firm, Elena Silenok and Chris Dixon, Silenok confirmed.
Other notable limited partners include Jeremy Levine, CEO of Underdog, a fantasy sports company, and Jacob Fortinsky, the CEO of Novig, a sports-focused prediction market, both of whom confirmed their involvement.
One of the founders of the new fund, Adhi Rajaprabhakaran, was the second trader to join Kalshi Trading, the platform’s separate market-making arm, and now the author of 50 Cent Dollars, a popular blog on prediction market infrastructure and business.
“Adhi is a talented investor and we are excited to back him,” Silenok said.
Noah Zingler-Sternig, the other founder, was the head of operations at Kalshi and led the exchange’s integration with brokerage Robinhood Markets Inc.
Rajaprabhakaran and Zingler-Sternig declined to comment.
Prediction markets have faced blowback from state gaming regulators who have argued in court that they offer unlicensed sports gambling. But the platforms are overseen at the federal level by the Commodity Futures Trading Commission, which has, under its new chair, Michael Selig, supported the exchanges in their legal battles with states.
The document says the fund could invest in trading firms that make markets on prediction markets and analytics platforms that help participants track the markets. Sports have been the most popular subject for trading over the last year, but the founders say that there are still big opportunities in the space.
“At the moment, prediction markets might appear to be just about sports, but that is only the latest chapter in what we believe to be a very long story,” the founders said in the pitch document, which forecasts the industry could reach $10 trillion in trading volume over time.
By Lydia Beyoud
