ICO Private Sale, Presale and Crowdsale Pros and Cons

Posted by: ico-check.com
Article
March 20, 2018
ICO Private Sale, Presale and Crowdsale Pros and Cons

Most ICOs have 3 parts to their tokensale, these are private sale, presale and crowdsale. Though not all ICOs do this with some ICOs choosing to not hold one or two of the sales because of various reasons like hitting hardcap early, or wanting a wider distribution of tokens to the public.
In this article, we will delve into the various ICO sale events. This is in no way comprehensive study, but the ico-check team have exerted our best effort to encapsulate and simplify the various pros and cons of participating in the various sales.

 

ICO PRIVATE SALE


Also called Institutional Round. Typically defined as a sale of tokens to early investors that is not open to the public or not announced. If privatesale is announced, ICOs usually have stricter requirements for participation and are very picky with who they let into private sale with some doing video calls or interviews to ascertain if investor is aligned with the ICOs goals. Bonuses or discounts may be offered based on how big the contribution is.


Some pros or positive aspects of participating in privatesale:


  1. Greatest discount or bonus compared to presale or crowdsale
  2. Possibility of quick return if tokens bought at discount are sold at ICO price when token trading begins.
  3. Assured supply of tokens for if ICO hits hardcap during privatesale or presale which is highly possible in very popular ICOs.
  4. Possibility of purchasing more tokens compared to crowdsale or presale since private sale usually aimed at institutional level investors.


These bonuses are offset by some ICO privatesale risks or privatesale negatives like:


  1. Higher risk due to inability to gauge how successful presale or crowdsale will be.
  2. Greater risk of cryptocurrency volatility wiping out or negating bonuses or discounts compared to crowdsale.
  3. Possibility of funds not being refunded if ICO does not hit softcap during crowdsale or presale. This differs per ICO so its best to ask the team.
  4. Higher minimum contribution than presale or crowdsale.
  5. Possibility of a locking period for tokens or bonuses in private sale.
  6. Higher risk since most likely the ICOs product is not near MVP at this point.
  7. Potentially stricter KYC and background checks means not everyone will be accepted so a spot is not assured even if you comply with minimum purchase amounts or accredited investor status.
  8. Least liquidity of tokens due to token release usually being farthest way.
 

ICO PRESALE


Presale refers to a tokensale conducted before main crowdsale. Presales are announced and promoted on the website, social media and possibly thru advertising. An ICO presale provides a good middle ground for investors wanting a higher discount or bonus compared to crowdsale without the drawbacks or the high risks associated in participating in private sale. Various bonuses or discounts may be offered based on how early you contribute and how large the contribution is.


Some positives or pros of participating in an ICO presale are:


  1. Potentially greater discounts on tokens compared to crowdsale.
  2. Token purchase is assured. Sometimes, ICOs cancel crowdsale specially if the cryptocurrency market is in a bullrun which means ICO hits the fiat hardcap thru appreciation of crypto invested.
  3. Possibility of purchasing more tokens compared to Crowdsale since presale is usually aimed at bigger investors.
  4. Possibility of quick return if tokens bought at discount are sold at ICO price when token trading begins.


ICO presale negatives or cons


  1. Typically higher minimum contribution amount compared to crowdsale.
  2. Higher risk due to immature product or company. Some ICO’s are very early in their development phase and use funds acquired during presale to finance further development of their Minimum Viable Product (MVP) or to help finance promotion for crowdsale.
  3. Risk of cryptocurrency appreciation devaluing your tokens than if you would just held cryptocurrency or invested during crowdsale.
  4. General lack of liquidity of tokens while awaiting token trading
  5. Lesser ability to gauge success of ICO based on success of presale.
  6. Less tokens usually available as a whole to presale means popular ICOs presale gets sold out fast.
  ICO buy token coin

ICO CROWDSALE


An ICO crowdsale is the main tokensale of the ICO. It sometimes goes by several names like Token Generation Event (TGE) and Initial Token Offering (ITO). An ICO crowdsale is more widely promoted and advertised than presale. The crowdsale also usually offers the least risk of the 3 ICO sales but usually lesser bonuses or discounts compared to presale or crowdsale. Various bonuses or discounts may be offered based on how early you contribute and how large the contribution is.


ICO presale negatives or cons:
Pros or positive aspects of an ICO crowdsale:


  1. Usually lower risk due to more mature product or availability of MVP.
  2. Capability to gauge success of ICO based on presale and privatesale success.
  3. Less chance of increase crypto volatility affecting price of cryptocurrency invested in ICO.
  4. Usually easier KYC, most crowdsales do not require you to be an accredited investor.
  5. Usually lower minimum purchase amount compared to presale.
  6. More liquidity for tokens since there is less time left until token is tradeable.


Some cons or negative aspects of an ICO Crowdsale:


  1. Typically lower discount compared to Presale or Privatesale
  2. Possibly lower maximum cap per person compared to presale or crowdsale, very typical for ICOs that are oversubscribed.
  3. Waiting for Crowdsale sometimes means that it can be cancelled due to ICO selling out during presale. This is highly possible during a bull market if cryptocurrency contributed to the ICO during presale appreciates and ICO hits hardcap.
  4. Possibility of privatesale or presale buyers dumping tokens acquired at a discount on crowdsale buyers.
 

Choosing what ICO tiers or sales to participate in can be a bit hard. As investor or contributor you must know your investment and risk appetite so you can pick the best part of the ICO sale to participate in to achieve your goals. Evaluating all options can take time but the ico-check team believes that proper planning and due diligence will enable you to get the most out of every ICO you participate in.

The ico-check team hopes this article about various tokensale events has been helpful in formulating a winning strategy for ICO contribution. Watch out for our other articles!