Private Sale Key Points
- A private sale is a method of offering tokens to a select group of people before they are made available to the general public.
- It is commonly used in initial coin offerings (ICOs) and security token offerings (STOs).
- Private sales usually offer tokens at a lower price compared to the public sale.
- They are typically aimed at attracting larger investors, known as accredited investors or institutional investors.
- Private sales can help to raise initial funds for project development and expansion.
Private Sale Definition
A private sale in the context of cryptocurrency and blockchain refers to a pre-sale phase of a token offering where tokens are sold to a select group of individuals or entities, usually at a discounted price. This happens before the tokens are offered to the public. It is a fundraising strategy used to gather initial capital for a project.
What is a Private Sale?
A private sale is a process in which a blockchain or cryptocurrency project sells its tokens to a select group of investors before they are available to the general public. This is usually part of an initial coin offering (ICO) or a security token offering (STO).
The main purpose of a private sale is to raise initial funds for the project. This could be for development, marketing, or other operational costs.
Who Participates in a Private Sale?
Private sales are usually targeted towards institutional investors, accredited investors, and sometimes even venture capitalists. These are individuals or entities that can invest a significant amount of money into a project.
The participants in a private sale are often required to undergo a thorough identity verification process, also known as Know Your Customer (KYC) procedures.
When Does a Private Sale Happen?
A private sale typically takes place before a public sale or ICO. The timeline is determined by the project team and varies from project to project.
Where Does a Private Sale Happen?
Private sales usually happen online, either on the project’s website or through specialized platforms for token sales. They can also occur at industry events or conferences.
Why Conduct a Private Sale?
A private sale is conducted to raise initial funds for the project. Offering tokens at a discounted price can attract larger investors who can provide substantial capital.
Private sales also allow project teams to maintain control over who gets to own a significant portion of the tokens, which can be crucial for the project’s governance and future direction.
How Does a Private Sale Work?
In a private sale, the project team sets a specific price for the tokens and offers them to a select group of investors. These investors are usually required to sign a contract, agreeing not to sell their tokens until a certain period (known as the lock-up period) has passed. The investors pay for the tokens, usually in cryptocurrency, and receive the tokens once the sale has concluded.
