ICOs (Initial Coin Offerings) have become a much popular way to fund crypto-currency projects. The ICO is an event whereby fresh cryptocurrency projects sell part of its crypto currency tokens to early enthusiasts for the sake of exchanging money today.
ICOs offer a way for creators of crypto currency projects for raising money for their operations. Majority of ICOs raise money in crypto currencies like Bitcoin.
The Presale of ICO is a token sales event which is offered by start-ups, even before the key crowd sale of ICOs. A part of percentage of total tokensavailable is offered on sale. The aim is to provide investors who are interested in an opportunity to purchase tokens prior to the official date of the ICO.
ICO presale caters to either an exclusive group of investors (through invitation) or to general public via token sale web page. For prudent operation, pre-sales of ICOs will use different contracts such that there is no mix-up between funds from main ICO and pre-ICO funds. This will help in easy audit procedures.
Pre-ICOs may be run by some projects to collect funds to cater for expenses associated with main ICOs. Some expenses cover strategic recruitment, paid promo ads and costs of meet-up, all meant to trigger investor interest.
The Pre-sale price of tokens will be distinct from official ICO. However, generally the two occasions must be conducted within short intervals of one another.This will avoid many fluctuations in Bitcoin and Ether that investors will require to participate in most sales of tokens.
Aim of ICO Presale
There are numerous reasons why an ICO presale will be conducted by a start-up.
One aim could be to do a market test prior to the main ICO sale. This would provide management an idea about the interest leveltowards the project and also whether they are required to step up their promotional and marketing efforts to meet the funding aim of the main ICO.
Thus, an ICO pre-sale can be viewed as one beta launch. It is smaller and hence more controllable and manageable. Thus if something goes wrong, it impacts fewer people and can be fixed easily. This way all kinks in the process can be smoothened out in the initial stages.
A new development in pre-sale which appears to be effective is to garner private venture capital investment at a greater discount for the project in early stages.
Benefits
The most valuable benefit of ICO presales is that investors can purchase tokens at great discounts. Sometimes, discounts may be as steep as 50%.
Cheap selling of tokens happen as target for fundraising is much smaller than main, official ICO sale. Most ICOs are oversubscribed heavily, so by participating in pre-sales will ensure that you are assigned with the quantum of tokens that you desire to buy.
Projects can make use of the funds garnered by pre-sales to boost investor interest in official ICO via additional meet-ups and marketing. The expenses incurred into the pre-cursor of the ICO may also be covered.
A pre-sale may also ensure that project has gained some grip in the market by the passing away of the official ICO. When potential investors find that the project has gained some backing already, it will infuse confidence and render them likelier to participate in sale of tokens.
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