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How Is Investing In Pre-ICO Different Than Financing An ICO?

Summary

Over $1.25 billion dollars have been raised so far with ICO funding surpassing $300 million and that of VC a mere $200 million in July 2017.

A Pre-ICO is a token pre-sail usually carried out by the company to collect money to invest in its marketing and promotion.

The Pre-ICO buyers are offered more incentives than the ICO ones.

William Mougayar who is the author of The Business Blockchain and is the general partner at early stage fund Virtual Capital Ventures says that the emergence of new tokens every now and then doesn’t really appeal to him. He clarified by saying, “I’m more excited by how a given token, which is a kind of currency, is going to enable us users – society, government, whoever – to do things we could not do before, and that’s the frontier I think we’re barely scratching the surface of now.”

2017 – The Year of ICOs

The ICO funding hit an all-time high in June of this year reaching a whopping $550 million. This was also the first time that it crossed angel and early VC funding. Until now, a total $1.25 billion has been raised through 92 ICOs in 2017 alone, thus, attracting a number of other startups to rely on this strategy to collect funding.

Despite its popularity in the finance and investing world, ICOs are subjected to a lot of criticism. A statement was released by Monetary Authority of Singapore (MAS) which said that ICOs are, “vulnerable to money laundering and terrorist financing risks due to the anonymous nature of the transactions, and the ease with which large sums of money may be raised in a short period of time.”

The Newer Phenomenon of Pre-ICOs

The foremost thing to consider here is that Pre-ICO follows an altogether different contract than the actual ICO itself. They allow any interested investor to buy tokens before the crowd sale initiates,and are available at a lower price and an additional bonus.

As the Pre-ICO numbers have nothing to do with the actual ICO numbers, there are chances of discrepancies. Any project working with Pre-ICO needs to maintain a certain level of vigilance so that utmost transparency can be maintained regarding the money raised and the number of tokens sold.

CannaSOS is a startup based on the marketing and promotion of the worldwide cannabis industry and they have already sold 8 million Pre-ICOs within a week.  Apart from offering a 40% discount on the first 10 million tokens sold, the initiative has a strong future ahead making it garner a lot of attention.

The Cleverer Investment

A Pre-ICO is nothing less than a heaven for the investor as they tend to gain the coins at a very reasonable price. They also allow them to secure an allocation for themselves because these tokens fulfill their quota of subscription sooner than expected.

As soon as the token strikes a reasonable value, the investors can even think of selling them in secondary markets and can make a significant profit. However, they need to keep in mind that this may cause a blow to the value of the token. While they may receive their profit, the company initiating them may face certain problems so a lot of care needs to be taken while profiting from this investment.