In the crypto industry, an Initial Coin offering (ICO) is a common crowdfunding method that emerged as a smart alternative for Public Offerings. It facilitates fundraising for innovative ideas of Entrepreneurs and new projects of startups who are unable to participate in public offerings. The first ICO was conducted in 2013 and gained massive reach in mid-2017. Companies like Ethereum, waves, Brave browser, and Kiki, the messaging app have raised millions in ICO which is also called a Token sale.
Today’s ICO has many variants like STO, IEO, or ETO, which were developed to overcome issues in basic ICO like regulation, malicious activities, etc. Like these variants, Pre-Launch ICO or Token pre-sale is introduced to aggregate initial funding for the new projects. This Presale ICO is highly advantageous and beneficial to the business in many ways.
Let us see that in detail
What is a Pre-Launch ICO?
Pre-launch ICO is an event to raise an initial fund for the project that is held before the main ICO campaign by selling a limited number of tokens to specific investors. The Pre-sale ICO will be conducted expecting the Popular investors or VCs (Venture capitalists) to invest in some groundbreaking ideas that are said to influence the crypto world.
This pre-sale event is practical today and a few projects have raised huge funds through it like Datum which collected 1.5 billion dollars in 2017 and Telegram which raised 1.7 billion dollars in 2018.
The Major Difference Between Pre Launch ICO and ICO?
There are major differences between the Pre-Launch ICO and ICO in terms of working, benefits, and advantages. They are
- The price of a presale token is lesser than the token sold in ICO.
- Only a limited token will be available in pre-launch.
- In some cases, the tokens sold in the presale will be available to the users only at the time of the main event.
- Different smart contracts for pre-sale tokens and tokens sold at the main sale.
- Returns and rewards are higher for pre-sale token holders.
These differences add superiority to the Pre-launch and also foresee a peak sale in the ICO.
Now let us see the working of the Pre-ICO offering.
How does the Pre-ICO sale work?
Pre-sale ICO event works by listing several tokens at a discounted price before the main ICO of the project goes live. It will be sold to trusted and big-shot investors. Only a limited number of tokens will be listed at a discount price and will get sold out even in seconds. This initial fundraising is for the companies to complete the rest of the project or to use it for development purposes.
These tokens will have a different smart contract from the tokens listed in the main ICO. It is to prevent mix-up and confusion during audits as the interest offered for the Pre-ICO token is higher than the token offered in the main ICO. Also, the early investors will be given a special place through rewards, premium memberships, and authority to decision making. Apart from raising funds, the pre-sale has massive benefits to project development. Let us see that in detail.
Benefits of Pre-ICO sale
Every step in Business has to be beneficial for even the slightest percentage and contribute towards the growth of the project. In that case, the contribution of Pre ICO offering in the growth of the business are:
- Through Pre-sale, you will get funds and a strong association with the angel investors.
- Fundraised from Pre-launch ICO can be used further in project completion, paid promotions, Ad campaigns, hiring an elite team, building infrastructure, or even to conduct the main ICO event.
- Also, there is a high chance for a price surge of your token during the ICO time.
- This Pre-ICO lets you form a community with big shots and make your project legitimate before the ICO.
- And more importantly, it attracts more investors in the name of the sold shares. This means with the reference to early potential investors in the project, the ICO campaign will attract more common people to invest and make it big.
These benefits explain the importance of Pre-sale ICO in business and it can be attained only when you receive investments from popular and trustable investors in the market. To make this happen, you need to fulfill the expectations of the investors in your project. So, let us see about that
What do early investors look for in a project?
As the name denotes, Pre-sale is conducted before the main campaign. In some cases, it is to attract early interest to promote a product. In some other cases, it is for initial funds. In that case, you may have your unfinished product longing for investments. More importantly, you are in a need to attract investors who can come and invest in you in spite of this risk (unfinished project). At that time, there are certain things that investors look for in the projects. They are
- The white paper, which describes the unique plan of your business
- Innovative and potentially profitable ideas.
- Importantly, the legitimacy of the product i.e regulation
- Your team structure with entrepreneurial leadership and intellectual team members
- Even if not a complete product, a prototype of an idea that envisages huge returns on completion. A prototype experiment conducted with the target audience is an additional advantage
In addition to all technical points, they also look for premium advantages and benefits they will get in this presale investment. They are:
- The additional bonus and authority you give for investors in return for their early investment
- High gain with the surge in the price of the token after the main ICO. Well, the rise in token value benefits the project too.
When there is a need for the project to give what the investor expects, there is also a need for the investors to agree with the terms of the project. And as an entrepreneur, there are certain things that you should check on investors for the good of the project.
Let us see
The factors that companies should be aware of while getting investment from early birds.
From the investment, equal to the benefits you received, there is a risk too. While letting investment in, the project should be transparent for both investors and owners. The investors have to be informed of the two factors namely the token distribution list (who owns every token in the list) and the lockup period (holding period of token-you can only exercise the right but cannot sell it).
Lockup period is essential to prevent the investor from manipulating the token value at the main ICO. Because, the token value at the main ICO will be higher than the pre-sale token. So when an investor sells his tokens at the main ICO event for his own benefit, it will collapse the ICO structure that could end in unworthy fundraising. So to prevent this manipulation, strict background checks and KYC have to be done for investors.
When token pre-sale is hugely beneficial to business, the project needs an effective website developed with aid from the best pre-launch ICO development company.
Where can you get the Best Pre Launch ICO Development service?
For ICO pre-launch and website development, Zab technology is the finest Pre Launch ICO development company. We are one of the most trustworthy and efficient development companies on the Crypto platform. We offer quality ICO websites at a reasonable cost. In addition to ICO development services, we are also providing a wide range of crypto services constructed with respect to the requirement of clients. If you are searching for an excellent and experienced ICO development company, then choosing Zab technologies will be the ideal solution for your business