STAGES OF CRYPTO FUNDRAISING EXPLAINED
Part I — What will you learn?
Are you new to crypto and want to take part in ICOs? Here is a quick tutorial to start learning about the fundraising steps where you can contribute.
We are highlighting the key stages of crypto fundraising in this session. There are various stages of fundraising that correspond to different types of investors. However, we are focusing on the 3 main rounds or steps.
If you want to start investing in crypto projects or startups, you sure need to understand them, even if you haven’t considered it, it’s just super great to be enlightened. 👀
You might be wondering, “What are these fundraisers for?” What exactly is the point of this?🤔 Let’s get started!
Part II — 3 main rounds of fundraising you can take part in
These are token sales, they are the initial stages of the token offering before the cryptocurrency becomes publicly available. Now let’s get down to business.
STEP 1 — Seed round
What is the source of funding?: The first capital is raised from family offices, angel investors and accredited investors in general able to provide clever money, network and active support.
Goal: This round allows the project to raise enough capital to start hiring the team, start implementing products and briefly start the business and its operations.
Risk: This stage carries a higher level of risk, and funds are held for a long period of time. However, it is usually the earliest and cheapest point for investors to purchase tokens.🤩
STEP 2: Private round
How are funds raised?: Private round is where Venture capitalists (VCs) typically contribute.
Goal: Acquire users and scale the business model fast.
Risk: This round is more expensive than the seed round and more secure. The project has a team, advisors, and sometimes a bêta product ready
The business model becomes clearer at this stage. The listing is also closer than the seed round, the investors’ capital is locked for less time.
💡 As observed, both the Seed and Private rounds are funding phases usually reserved for an elite group of partners with the ability to provide marketing or solid financial support to the project they back. This makes it very difficult and quite impossible for the average investor to access the most hyped deals.
STEP 3: Public round or Initial DEX offering (IDO)
Where can these deals be found?: These token public sales take place on launchpads, where smaller investors grab the opportunity to buy smaller amounts of tokens. It is usually done on a first-come-first-served basis.
Goal: The public round is the final and often the largest part of the fundraising, preceding the tokens listing.
Risk: Due to the fact that a successful Seed & Private stages result in an established customer base, increasing revenues, better product, growing team, and expansion of the business and has basically created a solid foundation, the public round is less risky and the token price is higher for the investors. Lower return of investment but less risky too.
STEP 4: Token Launch and Listing
After these funding rounds, the token is launched and listed on Centralized Exchanges (CEX) such as Binance, FTX, Gate.io and Kucoin or DEX (Decentralized Exchanges) such as Uniswap or Pancakeswap.
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GAINS Associates does not provide individually tailored investment advice and does not take a subscriber’s or anyone’s personal circumstances into consideration when discussing investments.
Information contained herein is not an offer or solicitation to buy, hold, or sell any security.