How a token private sale actually works
Before a token trades anywhere public, it is usually sold in private rounds that look nothing like a share sale.
At a glance
- Most private rounds sell a SAFT — a contract for future tokens — not equity in the company building the network.
- Earlier rounds buy in lower and lock up longer; the public price reflects several rounds of prior buyers already holding.
- The number to watch is the fully diluted valuation implied by the round, not the headline amount raised.
A private token sale is the crypto industry's version of a seed or Series A round, except the instrument is rarely equity. Investors typically buy a SAFT — a Simple Agreement for Future Tokens — which is a contract for tokens to be delivered once the network launches, not shares in the company building it.
This matters because a SAFT holder owns a claim on a future distribution, not a stake in the issuer. If the network never ships, the agreement is usually worthless in practice even where it is technically enforceable, because there is no company equity underneath it to fall back on.
Pricing happens in rounds with different terms for different cohorts. The earliest backers get the lowest price and the longest lockup; later private rounds pay more for a shorter one. By the time a token reaches a public listing, several rounds of private buyers are already holding it at a fraction of the listing price.
The number that matters most to a later public buyer is the fully diluted valuation implied by the private round, not the round size. A small raise at a huge implied valuation means public buyers are being asked to mark up a large book of private tokens that have not yet sold.
| Round | Discount to public price | Typical lockup | Buyer |
|---|---|---|---|
| Seed | 80–95% | 2–4 years | Early backers, founders' networks |
| Private / Series A | 50–80% | 1–2 years | Venture funds |
| Strategic | 20–50% | 6–12 months | Exchanges, market makers, partners |
| Public | Reference price | None, or short | Anyone |
Key terms
- SAFT
- Simple Agreement for Future Tokens — a contract for tokens to be delivered at launch, not equity.
- Fully diluted valuation
- The implied value of every token that will ever exist, priced at the round's terms.
- Lockup
- The period after launch during which a private buyer's tokens cannot be sold.
Frequently asked
Can retail investors buy into a private round?
Rarely, and usually only through specific platforms with accreditation requirements — most private rounds are restricted to institutional or high-net-worth investors by securities law.
What happens to a SAFT if the project shuts down before launch?
Investors have limited practical recourse in most cases, since the agreement is a claim on tokens that will never be created rather than a claim on remaining company assets.
Why would a project sell tokens privately instead of just launching publicly?
Private capital funds development before there is a product or user base to justify a public listing, and lets the team raise without triggering public securities disclosure at that stage.