Quote from: tropyc on April 05, 2018, 10:47:13 AM

Today, most of them have started to onboard blockchain startups into their portfolio and even launch token sales; look at YCombinator's LiveEdu or Union Square Venture's investment in Filecoin.

Institutional investors prefer to enter the cap table at an early stage - before a public sale occurs. As such, this practice gives bargaining power to institutional investors and reduces their risks drastically.

1. Lack of transparency repels smart investors.
The practice of not disclosing private sale valuations introduces a series of structural problems:
Will the valuation drastically increase between the private and public sale? Are private sale investors looking to have a short-term exit? Has the private sale been engineered to guarantee fast and profitable exit?

2. Different valuation but same stage of development?
Private sales often occur weeks before the public one. Since most of initial coin offerings involve product-less start-ups (and therefore pre-product market fit startups), there is no significant difference regarding the stage of product development between a private and a public sale.

3. Against the blockchain ideology.
In the event of an opaque private sale valuation, smart investors would never chip in, as the risk of a significant valuation delta is considerable. Public sale investors are reluctant to significant changes in valuations and most importantly, to be the last ICO investor.

4. Benefits of Private sales.
First, it gives credibility to a blockchain start-up. Secondly, private sale investors can provide non-financial investment to the project. Finally, Initial Coin Offerings are resource-draining financial instruments that have high capital and operations expenditures, especially with marketing and promotion. Kickstarting an ICO is therefore costly, and private sale investors can fill the liquidity gap.

https://www.tropyc.co/pages/news/private-sales-limitations

Do you think private sales add value to an ICO?
private sale < public sale?

I see, thanks for this points and it's a great reminder that not all private sales are of worth our investments because it does have to many risks other than investing volatile cryptocurrency.
Investors should bump on this thread so that they will also learn this key points before investing their own favorite altcoins in the crypto market today.