A privatesale is a tokensale that is typically held before a presale and crowdsale. Privatesales can also be called institutional round. This type of sale is open to early investors or firms and is usually not open to the public or announced. If a privatesale is announced or advertised, the requirements for participation are usually higher than presale or crowdsale with minimum contribution amount set higher and with management doing videocalls and deeper negotiation with interested parties to check that their goals are aligned.
Privatesale has some characteristics that differentiate it from a crowdsale and presale. We can group these characteristics into Pros and Cons:
Some pros or positive aspects of participating in privatesale:
- Greatest discount or bonus compared to presale or crowdsale
- Possibility of quick return if tokens bought at discount are sold at ICO price when token trading begins.
- Assured supply of tokens for if ICO hits hardcap during privatesale or presale which is highly possible in very popular ICOs.
- 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 privatesale risks or privatesale negatives like:
- Higher risk due to inability to gauge how successful presale or crowdsale will be.
- Greater risk of cryptocurrency volatility wiping out or negating bonuses or discounts compared to crowdsale or presale.
- Possibility of funds not being refunded if tokensale does not hit softcap during crowdsale or presale. This differs per tokensale so its best to ask the team.
- Higher minimum contribution than presale or crowdsale.
- Possibility of a locking period for tokens or bonuses in private sale.
- Higher risk since most likely the product is not near MVP at this point.
- 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.
- Least liquidity of tokens due to token release usually being farthest away.