Prediction market startup Kairos this month announced a $2.5 million seed round. “Kairos means the opportune moment in time, and I think this is the right moment in history,” says its 22-year-old cofounder Jay Malavia.
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Kairos cofounders: Jay Malavia (L), 22, recently graduated, and Zayd Alzein, 20, will graduate in December 2026; both are students at University of Illinois. Photo courtesy of Kairos |
Another startup, New York-based Novig, launched its sports prediction market as a game in January 2024 and applied last summer for approval from the Commodities Futures Trading Commission to allow real-money betting on its exchange.
Founded in 2021 by two cofounders while they were students at Harvard University, the company has raised $33 million from investors including Forerunner Ventures and former NFL quarterback Joe Montana.
“The current administration has changed things,” says Novig founder Jacob Fortinsky, as reported by Forbes. “We certainly don’t want to miss the moment.”
It is among many new startups that are backed by investors in a race to claim a bigger share in the prediction market, a new industry which has been dominated by two major platforms, Polymarket and Kalshi.
At least a dozen early-stage startups have emerged over the past year with new offerings – often tools designed to help traders leverage their wagers or gain a competitive advantage, according to Bloomberg.
These companies aim to generate revenue by serving clients including hedge funds, cryptocurrency firms and brokerages seeking data and new ways to structure bets.
“Prediction markets are moving so quickly into the mainstream in a way where I think the amount of money being traded is going to go 100x in the next 5 years,” says venture capitalist Mark Goldberg, cofounder and managing partner of San Francisco-based Chemistry.
Other investors report a similar surge in interest. “Over the last year, it’s probably been one of the most popular areas for the places that we see new founders gravitate towards,” says Caitlin Pintavorn, partner at crypto-focused venture firm Paradigm.
In 2025, prediction markets saw rapid growth, with millions of users wagering more than $40 billion across Kalshi and Polymarket.
Activity has accelerated further this year, with more than $10 billion traded across both platforms in January alone, including $550 million wagered on the winners of Super Bowl LX.
Neither company is profitable, but recent equity investments from backers including Sequoia Capital and Intercontinental Exchange, parent of the NYSE, have valued Kalshi at $11 billion and Polymarket at $9 billion.
Funding rounds totaling $3.7 billion in 2025 turned Polymarket’s 27-year-old founder Shayne Coplan and Kalshi’s two 29-year-old cofounders into billionaires.
Other startups are seeking to replicate the same success but with different approaches. Some are offering derivative-style products with long and short positions, while others focus on aggregation, analytics or niche verticals.
New York startup Noise last month received a $7.1 million investment from a number of investors, led by Paradigm, which also led Kalshi’s $1 billion round in December.
Noise, with 11 employees, is now valued at $35 million. Rather than offering binary yes-or-no contracts, it operates as an attention marketplace where users can take “long” or “short” positions on internet trends, ideas and brands.
Its metrics draw on social media sources including X and Reddit.
“It took a lot of guts to do what Kalshi and Polymarket have done, especially on the regulatory front,” says Noise founder Gabriel Perez Carafa, 24, a recent graduate of the University of Southern California, as cited by Forbes.
“But we felt that the binary option question had exhausted itself in a way.”
Polymarket has moved into similar territory through a partnership with Kaito AI, a crypto research and data aggregator that also works with Noise.
Its new attention markets will let users bet on questions such as whether Anthropic’s mindshare will overtake OpenAI’s in a given month.
A Polymarket crypto lead said he expects hundreds of attention markets by year-end, supporting the firm’s aim to offer “markets on everything.”
“In the last year, there’s been a rush of talent that’s been trying to work in prediction markets, so that’s been great as a founder,” says Carafa.
Among new entrants, 22-year-old Ronit Jain, who studied engineering at University of California, Berkeley, founded Pluto after interning at robo-advisor Quantbase and helping develop algorithmic strategies for early Kalshi weather markets.
Pluto focuses on prediction markets tied to GPU costs for AI computing. Jain says the platform could help AI companies hedge computing expenses much like energy traders hedge crude oil prices.
“We want to be that financial layer to help people hedge, trade and speculate on a commodity that’s arguably the most important commodity of the next 10 years.”
Pluto raised a $3 million seed round last August from investors including early Polymarket backers, and sources say it is raising $7 million more at a roughly $60 million valuation while awaiting regulatory approval.
Supporters have long argued prediction markets can function as insurance tools. Some suggested that homeowners in hurricane-prone areas could hedge risk by betting on hurricane probabilities instead of buying traditional insurance.
Goldberg of Chemistry says insurance-style use cases may represent the industry’s largest growth opportunity, especially if wagers tied to sports or speculation about figures such as Donald Trump or celebrities like Taylor Swift are viewed as gambling.
“The line between gambling, gamification and consumer finance has never been more blurry in my opinion.”
Company leaders in the sector – including Kalshi CEO Tarek Mansour – say that putting money behind event outcomes offers a more reliable gauge of truth than conventional polls or surveys.
Mansour has said prediction markets could eventually compete with stock indexes in influence and relevance.
In 2024, he told business news platform Inc.com that prediction markets give traders a way to hedge against uncertainties that could damage their finances – including the impact of tariffs on a small business.
Despite the surge in funding and activity, investors including Goldberg say the sector remains early-stage, with unresolved challenges including manipulation risks and unclear consumer protections.
Still, venture firms continue backing young founders – many with little more than internship experience – with multimillion-dollar rounds.
