ICO startups are in between a rock and a hard place when it comes to figuring out how many token sales they want to have. The topic is incorrectly phrased as ICO stands for Initial Coin Offering. You can’t initiate an offer more than once. However, this does not mean that a startup cannot do more than one coin offering. We are finding that the number of ICO’s doing multiple level of sales is rapidly increasing. It is a trend for ICO’s to market 3 to 4 levels of coin sales.
Private, Pre, Main.
Currently, ICO’s are opting for a popular 3 tier Coin Offering system. We will talk about the fourth offering a little later.
Using the three tier system is good for both the ICO team and participants because of what I like to call “need and feed.” The main reason why an ICO team uses multi-offers falls under “need”. Many ICO’s are startups without the mass availability of funds that we usually associate with cryptocurrency. The teams behind crypto are usually passionate, young people with minds for technology. This means many of them are downright in the negatives when it comes to personal funding. They “need” money and funding. Their need is amplified during the beginning of the project by a very short time span and large amounts.
This is where the private sale comes into play. The private sale is the first round of coin offerings, usually only available to angel investors and investment firms. A client of mine, whom we picked up after their private sale, received 10 different investments of 50,000 USD each. The fund acts as the development team’s living expenses as well as money to hire services out of their scope. With the private sale investments, the team can now spend a majority of their time developing, and delegate marketing to others. The investors benefit from the private sale in that they get first dibs on a potentially new billion dollar company. They are also incentivized by incredibly bonuses, which can sometimes match their investments by 100%.
This is where “feed” starts to become important. The company now has funds to “feed” into their other ventures. They start heavily advertising for their main sale, and if they are a good company, their platform. It is during this time where ICO’s will reach out to Forbes and Influencers for placements. After spending money on whitepaper development, legal issues, and their platform, the team once again has to find additional funding. This time they will look at the community and their potential clients for the money. This is called the pre-sale.
The pre-sale is the world’s first opportunity to purchase a company’s tokens. A good project will fill up their presale list quiet quickly. This again gives the team additional funds that they can “feed” into their company. At this point, the dev team will polish up their platform development and get ready to go live. They will have a completed whitepaper and will have gone through a couple rebranding moves. Bounties and airdrops become more common as the project enters its final weeks before the main sale.
The main sale is what is widely known as the official ICO. Main sales open up a company’s tokens to the world and make it widely available. While a successful ICO doesn’t guarantee a successful company, having a successful crowd sale heavily increases your chance of surviving currency death. You are much more likely to become a top tier coin if you have a lucrative ICO. On the other hand, it is important to note that many ICO’s that sold out have turned out to be scams.
Post ICOs are either a wonderful thing or an absolute mark of shame. A successful company will sometimes do a Post-ICO sale in order to accommodate for early supporters who couldn’t get in the main sale. It is seen as an act of goodwill to participants for sticking around the project months before they launched.
On the other hand, post sales can sometimes be an act of defeat. A coin will have done zero homework before being launched. They will then wonder why nobody wants to participate in their token sale. A last ditch attempt to make some money will be made with a Post ICO before the company quietly exits.
Can a startup have more than one ICO for further funding?
Yes, absolutely. A company can technically sell as many of their coins as they want. Most will opt for the “need and feed” system of having a three layered token sale. This allows early investors to maximize their bonus tokens as well as provide funding for the development team. When an ICO maxes out on their main sale, they may launch a post ICO sale in order to reward longtime participants and attract new investors. Failing ICO’s will also attempt a post ICO in order make some money before exiting their unsuccessful project. Overall, a multi-layered ICO sale is not uncommon and is often used for further funding.