Catenaa, Thursday, March 26, 2026- Executives from leading prediction market platforms and venture investors have launched a $35 million fund to back startups building infrastructure for the expanding sector, according to details released this week.
The fund, 5c(c) Capital, is backed by Tarek Mansour of Kalshi and Shayne Coplan of Polymarket, alongside investor Marc Andreessen and others. It plans to invest in about 20 companies over two years, focusing on trading infrastructure, data systems and compliance tools.
Context
The launch follows rapid growth in prediction markets. Combined trading volumes reached about $127.5 billion by early 2026, with Kalshi and Polymarket accounting for most activity. Rising participation in markets tied to elections, economic indicators and global events has drawn increased investor attention.
Fund managers said the strategy centers on building foundational systems rather than consumer platforms. Target areas include market-making technology, pricing indices, developer interfaces and regulatory software designed for Designated Contract Markets.
Regulatory developments in the United States have added momentum. The Commodity Futures Trading Commission has outlined expectations for event-based contracts, reinforcing federal oversight. At the same time, legal disputes with several states continue, raising questions about jurisdiction and market access.
Despite competing directly, Kalshi and Polymarket executives have aligned on the need to strengthen the broader ecosystem. Kalshi operates under US regulatory approval, while Polymarket serves global users through crypto-based systems. Industry participants say both models require improved infrastructure to scale efficiently.
Implications
Investor interest has intensified alongside rising valuations. Kalshi recently secured funding at about a $22 billion valuation, while Polymarket is exploring a raise near $20 billion. New startups are emerging with tools for liquidity provision, data aggregation and application development.
Backers say prediction markets can improve forecasting by aggregating user expectations more effectively than traditional methods. Increased liquidity and stronger infrastructure are expected to support wider adoption.
However, risks remain. Ongoing regulatory actions, potential limits on certain contracts and concerns about market manipulation could affect growth. Legal challenges and policy shifts may also influence how platforms expand.
The fund’s launch reflects a broader shift toward infrastructure investment as the sector matures. Analysts expect continued growth through 2026, particularly around major political and economic events, with success tied to regulatory clarity and improved market systems.
Background
Prediction markets began as academic experiments in the late 1980s, with platforms like the Iowa Electronic Markets pioneering event-based forecasting. Over decades, the sector expanded into multi-billion-dollar platforms that combine trading, data analysis and real-time prediction. The 2024 U.S. elections marked a turning point, with $3.8 billion in volumes demonstrating that market-based forecasts often outperform traditional polls.
By early 2026, cumulative trading across major platforms reached $127.5 billion, driven by contracts tied to elections, economic indicators and global events. Regulatory developments have shaped the industry’s evolution. Kalshi became the first federally approved Designated Contract Market for event contracts, while Polymarket reentered U.S. markets after prior enforcement actions. Platforms continue to face state-level legal scrutiny, gambling law concerns, and oversight from the Commodity Futures Trading Commission. The sector’s growth has attracted venture interest and established financial players, signaling a maturation of prediction markets from research experiments to mainstream risk-pricing and forecasting tools.
