Trump's eldest son fund increases investment by $300 million, Polymarket's capital game

Author: Zhou, ChainCatcher

According to WSJ reports, Donald Trump Jr., the eldest son of Trump, is set to invest approximately $300 million into the prediction market platform Polymarket through his investment fund 1789 Capital, where he serves as a partner.

This funding is part of a new $1 billion financing round led by 1789 Capital. If the transaction is successfully completed, Polymarket's valuation is expected to reach approximately $21 billion. 1789 Capital has previously invested about $200 million into Polymarket and is expected to become one of its largest shareholders after this round.

The Past and Present of 1789 Capital

1789 Capital was established in October 2022, founded by investment bankers Omeed Malik, Rebekah Mercer, and entrepreneur Chris Buskirk, with Malik serving as president.

Malik graduated from Colgate University and Emory University School of Law. He worked as a corporate lawyer early in his career, then moved to MF Global, and later joined Bank of America Merrill Lynch, where he was responsible for the commodities brokerage business.

In early 2018, Malik left after being investigated due to accusations from subordinates, subsequently filing a $100 million arbitration claim, alleging defamation and discrimination by the bank. Bank of America agreed to pay an undisclosed amount in the millions to settle the matter in July of that year, and neither party provided a conclusive statement on the facts.

Afterward, Malik founded the boutique investment bank Fawakhari Partners, investing in conservative new media projects and serving as chairman of a SPAC. According to his own recollection, his political stance shifted due to dissatisfaction with the government's response to the COVID-19 pandemic, leading his investment narrative to gradually turn against ESG and DEI.

After the 2024 election, Trump Jr. joined 1789 Capital as a partner, and the fund's size rapidly expanded.

By early 2025, its growth equity fund was approximately $150 million to $200 million, surpassing $1 billion by September of that year, and reaching $2 billion by the end of December, closing to new investors. By May 2026, the assets under management had risen to about $3.5 billion, growing approximately 17 times since early 2025.

The fund invests across a wide range of sectors. In artificial intelligence, it includes Cerebras, Groq, Perplexity, Databricks, and Crusoe; in defense and military, it has Anduril, Hadrian, and Vulcan Elements; in consumer, it includes the e-commerce platform GrabAGun, the e-cigarette brand Juul, and PublicSquare; in space, it covers SpaceX and Axiom Space, and it has also participated in financing for Musk's Neuralink, X, and xAI.

According to CNN, in the first 500 days after Trump's second term began, the ten defense, aerospace, and software companies invested in by 1789 Capital received over $1.6 billion from federal contracts and grants. 1789 responded that it had never discussed federal contracts for its portfolio companies with the government. Trump Jr.'s side stated that he does not facilitate connections between the companies he invests in or advises and federal agencies.

One of the most notable cases is Vulcan Elements. In August 2025, 1789 Capital invested in the company when its valuation was about $200 million. Three months later, the Pentagon issued a $620 million loan to it, and the Department of Commerce added a $50 million grant, causing the company's valuation to jump to approximately $2 billion. Senator Elizabeth Warren and others signed a letter accusing this transaction of involving serious conflicts of interest.

Polymarket is another name that cannot be avoided by this institution. Since January 2025, Trump Jr. has served as a paid strategic advisor to Kalshi and received company stock valued at approximately $300,000. In August 2025, he joined the Polymarket advisory board against the backdrop of 1789 Capital's investment in Polymarket.

The two companies are direct competitors, and he sits at the table for both. His spokesperson responded that this would not change his role at Kalshi. Meanwhile, the Trump Media Group once planned to embed its own prediction product Truth Predict into Truth Social and discussed providing Truth API to Wall Street.

According to Fortune, although there is currently no public evidence showing that Donald Trump Jr. or the Trump family has used government insider information for trading, the potential conflicts of interest arising from the intertwining of presidential public information, market trading, and family business interests are drawing external attention.

Valuation Frenzy, Revenue Mystery: The Capital Game of Polymarket

Polymarket's valuation jumps almost always follow a regulatory or capital event.

In 2022, the Commodity Futures Trading Commission determined that it was operating an unregistered derivatives exchange, imposing a $1.4 million fine and requiring it to block U.S. users. The platform subsequently shifted to overseas operations, settling event contracts with on-chain stablecoins.

The 2024 U.S. election became a turning point, with political betting turning Polymarket into a global opinion market, leading to a significant increase in trading volume in the fourth quarter of that year.

In July 2025, the Department of Justice and CFTC concluded their investigation of the platform without prosecution. On the 21st of the same month, Polymarket invested $112 million to acquire the licensed exchange and clearinghouse QCEX, gaining shell resources to return to the U.S. market. On August 26, 1789 Capital announced a strategic investment, and Trump Jr. simultaneously joined the advisory board.

In October 2025, the parent company of the New York Stock Exchange, Intercontinental Exchange, committed to investing up to $2 billion, with a pre-investment valuation of about $8 billion. On November 25, the CFTC issued a revised designation order, allowing its U.S. entity to operate through a futures brokerage intermediary model. After the regulatory door opened, traditional finance began to enter on a large scale.

In March 2026, Intercontinental Exchange invested another $600 million. The company disclosed cumulative holdings of approximately $1.6 billion, accounting for about 22% of the issued shares, making it the largest institutional shareholder (recently indicating it may continue to increase its stake). A round of financing in April 2026 introduced institutions like D.E. Shaw and G Squared, bringing the valuation to about $15 billion. Now, 1789 Capital is leading a new round of approximately $1 billion, contributing about $300 million, with a post-investment valuation looking towards $21 billion, and after this round, it will also become one of the largest shareholders.

Behind the rapidly rising valuation, the revenue figures tell a disjointed story. Polymarket began charging traders fees in January 2026, with annual revenue projections from third-party platform Sacra at about $1 billion, while on-chain data platform DefiLlama estimated annual revenue at about $162 million, a nearly 8-fold difference. Based on a $21 billion valuation, using the former for the price-to-sales ratio would be about 21 times, while using the latter would be close to 130 times.

Data platform Artemis shows that from October to December 2024, the prediction market was almost entirely Polymarket's market. This year, the situation began to reverse, with the World Cup pushing the total market weekly trading volume to about $17 billion, maintaining above $10 billion weekly post-event, but the incremental volume mainly flowed to competitor Kalshi.

By August, Kalshi's non-sports trading volume was about $24.9 billion, while Polymarket only had about $1.5 billion; Polymarket's share of the crypto category dropped from about 80% to about 10% within a year. Political betting, however, remains Polymarket's stronghold, consistently holding about 90% market share.

Even after regaining U.S. compliance licenses, Polymarket's business focus remains overseas. On-chain data shows that in the week of August 30, its fee income from international users contributed about $1.4 million, while U.S. users contributed about $610,000, with international users accounting for over 70%, and the trading volume structure is roughly similar.

More importantly, the prediction market is no longer a two-company show. As trading volumes grow, centralized exchanges and on-chain protocols are also squeezing in, which means Polymarket is being pressured from both sides.

Coinbase opened prediction markets to U.S. users at the beginning of the year, routing orders through Kalshi's compliant track, claiming this is one of the fastest new products to launch. Robinhood embedded event contracts into its brokerage app earlier, first directing traffic to Kalshi, and then preparing for its own licensed exchange, Rothera. Crypto.com launched OG, Gemini introduced Predictions, and Interactive Brokers' ForecastTrader and Webull have also listed similar products. The traffic entry is shifting from crypto-native websites to brokers and exchanges that already have funding accounts.

On the other side of the chain, fragmentation is also occurring. Limitless on Base is doing 15-minute and hourly crypto short-cycle trading, with monthly trading volume reaching a billion dollars at one point. Opinion and Predict.fun on BNB Chain are capturing macro themes and Binance wallet traffic, respectively. Myriad is embedding into media, while Azuro provides market-making infrastructure for dozens of front ends, and Hyperliquid is integrating result contracts into its own order book with HIP-4.

Capital is rushing in, making the space increasingly crowded, which makes the issue of exit more urgent. The capital exit routes are essentially through token issuance and IPOs. Last year, Polymarket executives publicly stated that there would be tokens and airdrops; the parent company Blockratize applied to register the POLY and $POLY trademarks in February this year, and ICE's cooperation announcement also mentioned future tokenization arrangements, but specific issuance timelines and airdrop rules have not yet been finalized.

Currently, the company has not submitted an IPO prospectus, and J.P. Morgan ended its banking cooperation with Polymarket last year due to regulatory risks, but the bank stated that it still maintains multiple business interactions with the company and is considering participating in future IPO underwriting.