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Investors are rushing to spend millions on a hot startup called Kalshi as loans or even, unusually, we’ll find out, cash later. Kalshi is an exchange that allows people to bet, as formal commodity trading contracts, on the outcomes of cultural events, from election results to how long Taylor Swift’s latest album will top the charts.
Betting on the results of the upcoming US election has sent demand so high that Kalshi has risen to number one in the Apple App Store, after years of being unranked among the finance category and to number seven overall as of this writing.
Calci’s need for cash reserves has increased sharply to ensure it can provide immediate financing to clients betting on the US elections. So, over the past few days, the 5-year-old Sequoia-backed startup has received tens of millions from investors in short-term loans, according to a source familiar with the situation. In addition, the company is currently in discussions with new and existing investors about raising a formal equity round of up to $50 million, although it is also possible that the startup could raise more.
Among the investors who have provided capital to Calci so that the company can maintain its growth until Election Day is venture capital firm Neo, one of its early backers. Neo’s founder, Ali Partovi, sent Kalshi a total of $12.4 million, consisting of $5.4 million of Neo’s capital and $7 million of Partovi’s personal funds, according to a now-deleted tweet posted by Tarek Mansour, Kalshi’s co-founder and CEO. While it is very rare for investors to send money (let alone millions) without locked-in terms and a signed contract, Partovi’s letter to Mansour said: “We can find out the terms later.”
Kalshi did not respond to a request for comment.
Kalci opened its electoral market last month after A The judge denied Commodity futures tradingVersion Request to prevent trading in election-related derivatives. (The CFTC is appealing the court’s ruling.) Since then, the company has traded nearly $200 million in contract value to people who want to bet on the outcome of the political race. He told CNBC on Monday. “The demand curve is really massive,” he said.
Calci quickly strengthened its cash position in anticipation of additional betting on the US elections. Like most brokerages, the company offers instant funding to new users. This means that users can start trading immediately, although it may take two to three business days for the funds to be officially transferred from the customer’s bank account to Kalshi’s.
Although investors assume Calci’s growth surge will subside after the election, they believe the company has grown so much over the past month that it will never return to its previous size, this person said.
Since Calci won the ruling against the CFTC, other companies have begun offering elective contract trading to US citizens. On Monday, Robinhood introduced the market To bet on the presidential elections. Interactive Brokers also launched elective contracts following Calci’s legal victory.
In addition to Sequoia and Neo, Kalshi’s backers include Y Combinator, Henry Kravis, and Mantis VC, a managed fund. The company has raised a total of $106 million in equity capital and was most recently valued at $787 million, according to PitchBook data.
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