By Anirban Sen
NEW YORK, Sept 29 (Reuters) - Kalshi is in advanced discussions to raise about $1 billion in fresh funding from existing and new investors, including Tiger Global Management and Dragoneer Investment Group, according to people familiar with the matter, as the prediction markets exchange looks to cement its lead over arch-rival Polymarket.
The fresh capital raise is expected to be finalized in the coming weeks and will value Kalshi at about $40 billion, the sources said, requesting anonymity
as the discussions are confidential. It comes on the heels of a $1 billion fundraise in May that valued the firm at $22 billion.
Sequoia Capital, which is an existing investor, is in talks to lead the latest funding round with Wellington Management, the sources said. The Information reported Sequoia and Wellington's discussions in August. Alfred Lin, one of the co-leaders at Sequoia, currently sits on Kalshi's five-member board of directors. The details of Tiger Global and Dragoneer's involvement, as well as the size of the latest fundraise, have not been previously reported.
Representatives for Kalshi and Tiger Global declined to comment. Sequoia, Wellington, and Dragoneer did not respond to requests for comment.
The funding talks come as New York-based Kalshi looks to make an ambitious push to broaden its platform to go beyond its prediction markets roots that spanned sports betting to election outcomes, and become a one-stop trading platform for a wide array of asset classes that is starting to compete with traditional exchange heavyweights, like CME Group and Intercontinental Exchange, the parent of the New York Stock Exchange.
Over the course of the past year, Kalshi has also leapfrogged its nearest competitor Polymarket and grabbed market share at the expense of its crosstown rival, according to data from Dune Analytics, as the latter has been beset with struggles around the launch of its US platform and an investigation from the Commodity Futures Trading Commission (CFTC).
Polymarket, which counts Intercontinental Exchange among its biggest backers, is currently in separate discussions to raise $1 billion in fresh capital, according to people familiar with the matter. Bloomberg reported on Polymarket's funding talks earlier.
Kalshi was founded in 2018 by Massachusetts Institute of Technology alumni Tarek Mansour and Luana Lopes Lara. The company, which is regulated by the CFTC, was seeded out of a startup accelerator program run by Y Combinator, one of Silicon Valley's most prominent backers of early-stage ventures.
Kalshi has recently held early discussions on a potential initial public offering in the coming years, according to the sources and a recent interview with CNBC by Mansour.
Chase Coleman's Tiger Global has a deep history in the venture capital landscape and pioneered the crossover investing model, having backed several high-profile companies over the past two decades, including OpenAI, ByteDance, Revolut, and Flipkart.
More recently, the firm raised a $2.2 billion venture fund, the Private Investment Partners 16 fund and is in the process of raising its PIP 17 fund, as part of a strategy to ratchet up its venture capital bets following an industry-wide downturn during a two-year period from 2022. Tiger Global currently has assets under management of about $60 billion.
San Francisco, California-based Dragoneer is a prominent technology-focused investment firm, which has backed the likes of OpenAI and SpaceX in recent years.
As prediction markets are fast becoming alternative venues for traders to place bets on big US names like Nvidia and Apple, they are also starting to raise concerns about investor protection and market oversight, Reuters reported earlier in September. Several lawmakers, including US Senator Adam Schiff, a California Democrat, have recently raised concerns about the burgeoning growth of prediction markets.
(Reporting by Anirban Sen in New York; Editing by Megan Davies and Nick Zieminski)
