Today, we announce that a16z will co-lead the Series D funding round for @Kalshi, a regulated prediction market trading platform. Prediction markets are a modern manifestation of a classic economic concept, most clearly articulated by Friedrich Hayek. Hayek and the Knowledge Problem Hayek argued that no central planner could access the dispersed knowledge held by millions of individuals in an economy—a fundamental challenge that later became known as the "knowledge problem." Much of this knowledge is implicit and unspoken, rooted in people's experiences, circumstances, and preferences. Hayek not only identified the limitations of central planning, he also offered a solution. In his 1945 essay, "The Use of Knowledge in Society," Hayek argued that the solution lies in looking outward, not inward: "We need decentralization," he said. For Hayek, markets are not merely allocation mechanisms but information systems. Prices act as signals, compressing vast amounts of local knowledge into actionable information. Furthermore, prices create incentives: they encourage people to make decisions and take actions that feed information back into the system. This creates an iterative feedback loop, an engine that drives ever-better performance. Today, we might say that the answer to the knowledge problem isn't to give central planners more sophisticated computers. The answer is that the market itself is the computer. Prediction markets concretize this idea, applying it to questions about the future and translating collective knowledge into prices that reflect probabilities. Why We Invested in Kalshi This is why we're passionate about prediction markets and why we invested in Kalshi. Kalshi is bringing prediction markets mainstream in a compliant manner. It's a scalable event contract platform covering everything from elections and economics to sports and culture. Its trading volume has reached billions of dollars and continues to grow rapidly. Kalshi also plans to deeply integrate cryptocurrencies, a collaboration we're very excited about. Kalshi announced today that it will expand its operations to 140 countries worldwide. We're not the only ones excited about the potential of prediction markets. For businesses and investors, event contracts can hedge risks, such as those arising from economic or policy changes. For policymakers and analysts, market prices offer real-time predictions that potentially surpass even opinion polls and expert forecasts. For society as a whole, prediction markets create an open, transparent, and incentive-driven way to aggregate beliefs about the future. Prediction markets are at a critical juncture. With trust in existing institutions at an all-time low—at least according to polls—we need new systems that can earn trust in a different way. We believe the answer lies in open, decentralized systems. DeFi offers an alternative to traditional finance, stablecoins offer an alternative to traditional payment providers, and prediction markets offer an alternative to expert predictions. Where once people trusted banks or experts, now they can trust protocols and markets. Hayek's insight was that knowledge is too widely distributed for any single authority to control. Instead, we need systems that harness the wisdom of the crowd. Karshi puts this concept into practice, transforming decentralized information into concrete information.