Peter Thiel's Founders Fund, Vitalik Buterin Back $45M Investment in Polymarket

Polymarket, the cryptocurrency-based prediction market platform that's enjoying a breakout year in the run-up to the U.S. presidential election, raised $45 million in a series B funding round with a roster of big-name investors.

Billionaire Peter Thiel's Founders Fund is the lead investor, Polymarket founder Shayne Coplan told CoinDesk via Telegram message. Other participants include Ethereum creator Vitalik Buterin, 1confirmation, ParaFi and Dragonfly Capital, Coplan said. He did not disclose how much the company was valued in the transaction.

The round follows a previously undisclosed $25 million series A led by General Catalyst, Coplan said. Factoring in a $4 million seed round in 2020, Polymarket has raised well over $70 million.

The company said it also hired Richard Jaycobs as head of market expansion to prepare for its next phase of growth. Jaycobs previously served as executives of tradfi firms, including president of the Cantor Exchange and as the CEO of The Clearing Corporation.

Polymarket is the most successful attempt to build prediction markets on crypto infrastructure. In prediction markets, traders bet money on verifiable outcomes of real-world events in a specified time frame. These events range from sporting matches to celebrity engagements to nuclear armaments.

For example, a contract on Polymarket asks if the U.S. Securities and Exchange Commission will approve a spot exchange-traded fund for Ethereum's ether (ETH) by May 31. "Yes" shares were recently trading at 16 cents, indicating the market sees a 16% chance of it happening. Each share pays out $1 if the prediction comes true, and zero if not.

More than mere gambling, these markets create positive spillover effects by giving more accurate reads on public sentiment and more reliable forecasts than polls and pundits, advocates such as economist Robin Hanson have long argued.

Late last year, analysts at Bitwise Investments estimated that a record $100 million would be staked on crypto-based prediction markets (of which Polymarket is the largest by far) in 2024. A single contract on Polymarket has already blown past that estimate.

More than $125 million of bets have been placed on the presidential election through the platform. All told, traders have wagered $202 million on Polymarket this year, according to the company.

Polymarket has a big disadvantage: It is locked out of the U.S., the world's largest economy. Under a 2022 settlement with the Commodity Futures Trading Commission, it is barred from doing business with U.S. residents. This has left the field open for Kalshi, the sole CFTC-regulated prediction market platform (which settles bets in dollars rather than crypto).

However, that imprimatur is a double-edged sword. The CFTC has soured on what it calls "event contracts;" last week it proposed a ban on election-related bets, which would affect Kalshi and PredictIt (which operates in the U.S. under a no-action letter, or regulatory exemption) but not the already-banished Polymarket.

Coplan is scheduled to speak at CoinDesk's Consensus 2024 event in Austin, Texas, on May 31. Register here.