What are the Ins and Outs of Private Placement ICOs?

2018-08-21T04:23:35+00:00August 20th, 2018|

Some industries have a not so wonderful habit of making everything complicated. Part of this is to give everything an ultra-important and exclusive feel. Think of Wall Street and their ridiculously complicated products and trading strategies. Not only should you not know what financiers do; you actually can’t know.

Unfortunately, the blockchain industry can fall into this elitist trap as well. Some companies, for whatever reason, mask their technology in so much jargon that it is unintelligible. The industry as a whole, since it is so tech heavy, can pass around misconception after misconception without the masses understanding what’s really going on. Because there is a lot of misinformation about ICO private sales and private blockchain money, here are a few helpful ins and outs of the world of private sale ICOS.

Private ICO Offerings Don’t Have to Fully Replace Public Offerings

One common but an incorrect assumption is that an offering must be one-hundred percent ICO private sale or one one-hundred percent public ICO. In reality, however, private placement ICOs can wear many hats. This is the difference between ICO privates sales vs. pre-sales. An ICO private sale consists of the main sale to a list of sophisticated investors. A private pre-sale ICO is, by definition, a pre-sale; the main sale, if you will, can be public or private. Truth be told, ICO private placements can give blockchain startups a tremendous amount of fundraising options. For example, you can do a private pre-sale, followed by a public sale, or make both sales private.

ICO Private Funding Doesn’t Mean Dodging Regulations Altogether

In both traditional and crypto finance, the mainstream media makes it seem like private offerings are just a way to avoid accountability and regulations. And while some may use private blockchain rounds this way, this doesn’t in anyway invalidate their legitimacy. By that same logic, public offerings of all types should also been viewed with suspicion, since there is a long and storied track record of fraudulent public offerings.

So, your private placement ICO could be a bunch of fraudulent hocus pocus. Or, it could be a complaint, legal way of raising funds through a set of sophisticated, accredited investors–as it should be! Private ICO offerings are a great way to avoid the headaches of public sales while capitalizing on niche markets. At the same time, you can still obey the law and seek to provide true value to your investors and customers alike.

Raising Money Privately for a Blockchain Project Doesn’t Have to be Hard

Typically, when startup teams think of private funding ICOs, they think of a lot of leg work and due diligence. Of course, hard work and due diligence are crucial to any task, not just examining ICO private pools or drafting ICO private placement memorandums. But if you choose to partner with IBC, we can aid you greatly in these processes. Our expert panel can help you evaluate potential investors (family, friends, business colleagues) as well as prospect suitable sophisticated investors who might consider joining you in your blockchain project.