How does a Pre-ICO work?

[jacquelinecr]

I found couple of Tokens and projects that I would be interested to invest together with some friends, by joining their pre-ico.

How does it work?

I tried to research some previous pre-ico and I have found out that the bitcoins are sent to a wallet not connected to the ICO. At the end of the ICO period the token was send to the ethereum wallet provided by the investor.

Is this normal? And all these are done through email?

And a logical question, if the above are correct how would I know if the ICO gathered the amount it says it has gathered during the pre-ico?

[James_CanYa]

Are you talking about a pre-sale?

A pre-sale usually has a much lower hard cap and is for early followers of the project. Though plenty of ICO's are conducting shady business and strange ICO terms - stay aware!

[lolzo]

You could look at the address they are collecting the ETH in and see the balance - that would be some kind of proof they have raised what they say they have.

[tobatz23]

Pre-ICO is the tokens sale event before the official crowdsale begins. In most cases, the fund-raising targets for Pre-ICOs are often lower as compared to that of the main ICO and offer tokens at a lower price with a substantial bonus or sold cheaper. For the purposes of prudence,  Pre-ICO often uses a very different smart contract compared to the actual ICO itself, this is informed by the need to avoid a mixture of Pre-ICO funds with the main ICO to enable proper and easy account reconciliation and audit.

[Warren Buffert]

You can never be sure of what they have gathered. They can easily buy tokens or coins from themselves. Rinse repeat.

[lincolnmad]

I found couple of Tokens and projects that I would be interested to invest together with some friends, by joining their pre-ico.

How does it work?

I tried to research some previous pre-ico and I have found out that the bitcoins are sent to a wallet not connected to the ICO. At the end of the ICO period the token was send to the ethereum wallet provided by the investor.

Is this normal? And all these are done through email?

And a logical question, if the above are correct how would I know if the ICO gathered the amount it says it has gathered during the pre-ico?

Pre-ico is works like test the water on the project and usually that project give a good bonus for pre-ico sell to attract more investor to invest their project. I think all that is normal because they need to whitelist the investor through email so they can let the investor to invest on pre-ico. If the project is really good, the pre-ico can easily done in a second.

[benedictonathan]

I think Pre-ICO is just the company's way of saying that they .."have some tokens to sell at this dollar rate on this future date but you can buy that token from us now with a discount if you contact us about it." I think this is the definition of a pre-ICO.

[jacquelinecr]

You could look at the address they are collecting the ETH in and see the balance - that would be some kind of proof they have raised what they say they have.

The address is a private wallet, registered separately for each investor, since there is a limited number of investors allowed.

[yugyug]

I think Pre-ICO is just the company's way of saying that they .."have some tokens to sell at this dollar rate on this future date but you can buy that token from us now with a discount if you contact us about it." I think this is the definition of a pre-ICO.

this is what we commonly called as pre-selling, it is a business and marketing practice to attract more investors. example for a real-estate business, like they have a condominium unit for investments, the regular selling price of a fully furnish is 100000 USD and if they pre-sell it at an early stage of development it will cost like 70000 USD that is 30k cheaper. let's say the pre-selling schedule is sep. 1 2017 and the actual selling schedule is dec. 25, 2017. so if you hold your investment for almost 3 months you can gain of more than 30 percent. the purpose of pre-selling is to raise fund for capitalization for further development. same analogy with the pre-ico or pre-sale of token.

[RandomEvent]

For a lot of projects it is a way to hire an additional developer, pay for some more marketing, prototype creation, etc. It is also a way to ensure you meet your Soft Cap and you have the ability to go onto the next stage of the project

[100degrees]

Some can be pretty good, the reality is that a lot of people dump to the pre-ICO price once it hits exchanges. You usually have a chance to get your investment back with part of a return.

[ployfit]

Token distribution style differs in each project. Some of them issue the tokens and distribute to you instantly, some of them wait for the end of their ico and then distribute their tokens to you.

[adam1230]

Usually pre-ico or pre-sale gives more bonus for early birds. I prefer pre-sales then ICO sales.
If a project seems legit i always invest on pre ico cause its nearly %30 more then usual sale.
Its a good profit then i will sell quickly after hitting on exchanges.

[Koadharber]

You can never be sure of what they have gathered. They can easily buy tokens or coins from themselves. Rinse repeat.

On this thing we should really be aware on which those companies would announce pre-sale but shady business would possibly happen in the dark and might somehow they are just the ones who do bought on their own coin.Pre-sale usually have small cap which can easily be filled out which is somehow luring up investors if they saw that pre-sale was success.

[crypthomonkey]

Pre-ICO is the tokens sale event before the official crowdsale begins. In most cases, the fund-raising targets for Pre-ICOs are often lower as compared to that of the main ICO and offer tokens at a lower price with a substantial bonus or sold cheaper. For the purposes of prudence,  Pre-ICO often uses a very different smart contract compared to the actual ICO itself, this is informed by the need to avoid a mixture of Pre-ICO funds with the main ICO to enable proper and easy account reconciliation and audit.

thanks for your answer, at last I fully understand the concept)
 really appreciated for the brevity)

[darthmaul]

How does it work?

There are two different things in the ICO, first one is called as pre-ico phase and there is another one that's called as presale ICO. The first one is the one you are mentioning here which is most earliest stage in any ICO project.

In that phase ICO will catch up the early birds with lowest priced tokens but they will have "minimum" investment criteria for example jibrel @5000 USD one of the ICO that's running right now. This money then will be used to do the marketing and advertising of the ICO project and developing the premature phase of their roadmap.

 

I have found out that the bitcoins are sent to a wallet not connected to the ICO. At the end of the ICO period the token was send to the ethereum wallet provided by the investor.

That's rare case to happen and most of the ICO will get the funds raised via ethereum blockchain only and not from the bitcoin. But it's completely upto the terms of ICO whether they want to transfer the tokens immediately or not. But most of them will do it instantly. Better read the terms.

Is this normal? And all these are done through email?

Most of the time there is no need for direct contact in the ICO because everything is in front of you. It's public and open source. You can contact them at the forum announcement and they will respond there as well as email too.

And a logical question, if the above are correct how would I know if the ICO gathered the amount it says it has gathered during the pre-ico?

That will probably reflect in the tokens value when it comes to the exchanger after the ICO has ended. There is no point in lie if the ICO is legit completely.