The CEOs of Kalshi and Polymarket both invested in the same prediction market VC fund.

Author: Fortune

Translation & Editing: TechFlow

TechFlow Intro: The CEOs of two fiercely competing prediction market platforms—Kalshi and Polymarket—appear on the same list of limited partners (LPs) for a new venture fund. Named 5c(c) Capital, the fund was founded by two early Kalshi employees and aims to raise $35 million, exclusively investing in prediction market infrastructure. Also on the LP list are Marc Andreessen, Ribbit Capital’s founder, and Kyle Samani, former managing partner at Multicoin Capital—signaling that the prediction market sector is shifting from product-level competition to ecosystem building.

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The CEOs of Kalshi and Polymarket are locked in an intense battle to dominate the red-hot prediction market sector. Yet on at least one front, they’ve set aside their rivalry: both have invested in a new venture capital fund founded by two early Kalshi employees. According to a fundraising document reviewed by Fortune, the fund—named 5c(c) Capital—is raising up to $35 million to invest in prediction market startups.

The new VC fund takes its name from a clause in federal legislation governing commodities and derivatives regulation—a category into which prediction markets have now been formally included. Its general partners are Adhi Rajaprabhakaran—the second trader hired by Kalshi’s affiliated market maker—and Noah Zingler-Sternig, formerly Kalshi’s Head of Operations.

In addition to Kalshi CEO Tarek Mansour and Polymarket CEO Shayne Coplan, the document lists several high-profile venture investors among the fund’s early backers: tech VC giant Marc Andreessen, investing through his fund Moneta Luna; Micky Malka, founder of fintech-focused Ribbit Capital; and Kyle Samani, former managing partner at crypto VC Multicoin Capital.

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

A Kalshi spokesperson confirmed Mansour’s participation. “Adhi knows that the next few years will be critical for building the infrastructure surrounding prediction markets,” said Samani in a statement confirming his support for 5c(c) Capital.

The Prediction Market Boom

This fundraising effort by two early Kalshi employees coincides with prediction markets becoming one of Silicon Valley’s hottest sectors. Kalshi is currently raising $1 billion at a $22 billion valuation, led by veteran Silicon Valley investment firm Coatue Management. Its rival Polymarket is seeking a similar valuation of approximately $20 billion. Both platforms allow users to place bets on a wide range of topics—from Bitcoin or Ethereum price movements to the NCAA basketball tournament champion.

Amid surging investor enthusiasm, however, state governments are attempting to curb the rise of prediction markets—especially after Kalshi and Polymarket opened their platforms to sports-related markets. Regulators argue these prediction markets are effectively sports betting venues subject to strict state laws. Kalshi currently faces roughly 20 federal lawsuits challenging its legality. Last week, Arizona’s Attorney General even filed criminal charges against the startup.

Both Kalshi and Polymarket—which has yet to launch its U.S.-based platform—contend that prediction markets are fundamentally distinct from sports gambling and that the Commodity Futures Trading Commission (CFTC), the federal regulator, holds jurisdiction over prediction markets that supersedes state authority.

Despite this daunting legal landscape, 5c(c) Capital’s fundraising document describes prediction markets as “a generational investment opportunity.” The two partners plan to invest in approximately 20 companies over the next two years—including prediction market market makers, index designers, and other infrastructure players.

The venture fund expects to close its first close within one month.

“Adhi is a brilliant investor, and we’re thrilled to support him,” said Elena Silenok, Founder and Managing Partner of Moneta Luna—the investment vehicle through which Marc Andreessen invests.