Investors are rushing to throw millions of rupees at a hot startup called Kalshi in debt or, unusually, we’ll guess cash later. Kalshi is an exchange that allows people to bet, as formal commodity trading contracts, on the outcome of cultural events, from election results to how long Taylor Swift’s latest album will top the charts.
Betting on the outcome of the upcoming U.S. election has fueled demand so much that Kalshi has reached the top spot on Apple’s App Store, after years of being unranked in the financial category, and seventh overall as of this writing. went
Kalashi’s need for cash reserves grew rapidly to ensure it could provide immediate funding for customers betting on the US election. So, over the past several days, the five-year-old Sequoia-backed startup has received tens of millions from investors in short-term loans, according to a source familiar with the situation. Additionally, the company is currently in talks with new and existing investors to raise a formal equity round of up to $50 million, though it’s also possible the startup could raise more.
Investors who have provided capital to Kalshi so the company can sustain its growth until Election Day include VC firm Neo, one of its early backers. According to a now-deleted tweet posted by Kalshi’s co-founder and CEO, Tariq Mansoor, Neo’s founder, Ali Pawaroti, sent a total of $12.4 million to Kalshi, including $5.4 million of Neo’s capital and Pawaroti’s. $7 million of personal funds were involved. While it is extremely rare for investors to send money without a lock-in and a signed contract, Pavroti’s message to Mansoor said, “We may know the terms later.”
Kalshi did not respond to a request for comment.
Kalshi opened his election market after one last month. The judge denied the Commodity Futures and Trade Commission. Application to stop trading in election-related derivatives. (The CFTC is appealing the court’s decision.) Since then, the company has made deals worth about $200 million for people wanting to bet on the outcome of political races, Mansoor said. told CNBC on Monday. “The demand curve is really steep,” he said.
Kalshi rushed to increase his cash position in anticipation of additional betting on the US election. Like most brokerages, the company offers instant funding to new customers. This means customers can start trading immediately, although it may take two to three business days for funds to be officially transferred from the customer’s bank account to Kalshi’s.
While investors expect Kalashi’s growth to slow after the election, they believe the company has grown enough in the past month to not return to its former size, the person said. said
Since Kalshi won the ruling against the CFTC, other companies began offering election contract trading to US citizens. On Monday, Robin Hood introduced a market To bet on the presidential election. Interactive Brokers also launched electoral deals after Kalshi’s legal victory.
Besides Sequoia and Neo, Kalshi’s backers include Y Combinator, Henry Kravis, and Mantis VC, which manages a fund. According to data from PitchBook, the company raised a total of $106 million in equity capital and was last valued at $787 million.
Credit : techcrunch.com
