What Is a Private Sale? A Complete Guide for Token Launchers
A private sale is a pre-launch funding round where a select group of investors purchases tokens before public availability. For Solana projects, this stage secures initial capital for development, marketing, and liquidity while establishing early backers. Structuring it correctly is critical for a successful public launch and long-term stability.
Key Points
- 1A targeted fundraising round before a public token launch, offering discounted tokens to strategic investors.
- 2Typically raises 20-50% of a project's initial funding at valuations 30-70% below public launch price.
- 3Requires clear legal agreements (SAFTs) and transparent vesting schedules, often 6-24 months.
- 4Essential for funding development, building liquidity pools, and securing early community support.
- 5A well-run private sale increases public launch success rates by over 40% according to industry data.
How a Private Sale Works for Solana Tokens
Think of it as the foundation-laying phase before the public building opens.
A private sale is the first major capital event for most Solana token projects. Instead of launching directly to the public on a platform like Spawned, creators first approach a closed group of investors—often angels, venture funds, or strategic partners—to sell a portion of the token supply.
This process involves several concrete steps:
- Determining the Raise Amount: Projects typically target 20-50% of their total initial funding here. For example, a project aiming for a $500,000 public launch might seek $100,000-$250,000 in its private sale.
- Setting Valuation & Discount: Private sale tokens are sold at a significant discount. A common range is 30-70% below the intended public launch price. If the public token price is planned at $0.10, the private sale price might be $0.03 to $0.07.
- Defining Supply Allocation: Usually 10-25% of the total token supply is allocated to the private sale. This is critical to avoid excessive early sell pressure later.
- Executing Legal Agreements: Investments are formalized using instruments like Simple Agreements for Future Tokens (SAFTs), which outline rights, vesting, and delivery conditions.
4 Core Benefits of Running a Private Sale
Skipping a private sale can leave a project underfunded and vulnerable at launch. Here’s why it’s a strategic necessity:
- Secures Development & Operational Runway: Funds from the private sale pay for smart contract audits, website development (like using Spawned's AI builder), initial marketing, and team costs before any public revenue exists.
- Builds a Strategic Support Network: Private investors become long-term advocates. They provide more than capital—they offer advice, connections, and help promote the public launch.
- Creates a Stronger Public Launch: With capital in hand, you can fund a larger initial liquidity pool. Data shows projects with a private sale have, on average, 2.5x larger opening liquidity, reducing volatility.
- Validates the Project Concept: Securing investment from experienced backers is a form of validation. It signals to the public that knowledgeable parties believe in the project's potential.
Private Sale vs. Presale: Key Differences
These terms are often confused but represent distinct fundraising stages with different audiences and rules.
| Feature | Private Sale | Presale (Public Pre-Launch) |
|---|---|---|
| Audience | Accredited/Strategic Investors (Closed) | General Public (Open, but often capped) |
| Typical Discount | 30-70% off public price | 10-30% off public price |
| Average Investment Size | $5,000 - $50,000+ | $100 - $1,000 |
| Legal Requirements | Strict (SAFTs, accreditation checks) | Lighter (Terms of Service, wallet connection) |
| Platform Example | Direct deals, specialized syndicates | Spawned, Pump.fun, Raydium AcceleRaytor |
| Primary Goal | Secure major strategic capital | Build broad community & final funding |
The Takeaway: A private sale targets 'smart money' for large checks and support. A presale targets the community for wider distribution and hype. Most successful projects run both, in that order.
How to Structure Your Private Sale Tokenomics: A 5-Step Guide
Getting the numbers right protects your project's long-term price stability.
Poorly structured private sales lead to immediate sell-offs post-launch. Follow this framework:
Should You Run a Private Sale Before Launching on Spawned?
The strategic choice that separates hobby projects from serious ventures.
For the vast majority of serious Solana token projects, the answer is yes.
Unless you are fully self-funding or launching a pure meme coin with no development costs, a private sale provides the resources and credibility needed for a sustainable launch. The capital lets you use Spawned's AI website builder effectively, fund a proper marketing push, and provide a deep initial liquidity pool—all of which increase your chances of success significantly.
Our Recommendation: Allocate 15% of your token supply, target a raise that covers 6 months of runway, enforce a 6-month cliff with 18-month linear vesting, and use the funds to prepare a standout public launch on Spawned.
3 Critical Private Sale Mistakes to Avoid
Learning from others' errors can save your project.
- Selling Too Much, Too Cheaply: Allocating 40% of supply at an 80% discount leaves no upside for public buyers and guarantees sell pressure. It kills long-term incentive.
- No Vesting or Weak Vesting: Without a multi-month cliff, private sale participants can sell all their tokens the minute trading opens on Spawned, crashing the price before the community can participate.
- Ignoring Legal Compliance: Using informal promises or simple Telegram chats instead of a proper SAFT agreement exposes you to massive risk. Always consult a crypto-savvy lawyer.
From Private Sale to Public Launch on Spawned
Closing the round is just the beginning. Here's how to use the capital effectively.
Once your private sale is complete, the real work begins to transition to a public launch. Your funds should be allocated:
- 40% for Development & Operations: Finalizing your token, smart contracts, and building your web presence with Spawned's AI website builder (saving $29-$99/month).
- 35% for Initial Liquidity: This is crucial. A deep liquidity pool on launch attracts more traders and reduces price slippage. Plan to provide 50-70% of your raise to the LP.
- 25% for Marketing & Launch Costs: Funding pre-launch buzz, influencer partnerships, and covering the Spawned launch fee of 0.1 SOL (~$20).
The goal is to enter your public launch on Spawned with a finished product, a marketing plan in motion, and sufficient liquidity to ensure a stable and successful trading debut.
Ready to Plan Your Token's Journey?
The foundation determines the height of the building.
A well-executed private sale sets the stage for everything that follows. If you're planning a Solana token, start by designing your tokenomics with the end in mind.
When you're ready for your public launch, Spawned provides the complete toolkit: a seamless launchpad with a 0.1 SOL fee, an integrated AI website builder to establish your brand, and a sustainable model with 0.30% creator fees and 0.30% holder rewards.
Structure your private sale wisely, then bring your project to the community with confidence.
Related Terms
Frequently Asked Questions
Minimum investments vary but commonly range from $1,000 to $5,000 for individual angels. For funds or strategic partners, checks can start at $10,000 or more. The amount depends on the project's total raise target and the number of slots available. Setting a minimum helps ensure investors are seriously committed.
A private sale round typically takes 2 to 6 weeks from start to finish. This includes time for preparing materials, pitching to investors, conducting due diligence, negotiating terms, and finalizing legal documents. Having a clear pitch deck, a prototype, and a solid team can significantly speed up this process.
Yes, absolutely. A Simple Agreement for Future Tokens (SAFT) is the industry-standard document. It legally binds the project to deliver tokens upon launch under agreed conditions (price, vesting). Operating without a contract exposes you to severe regulatory risk and potential disputes with investors. Always involve a lawyer experienced in crypto securities.
A standard allocation is between 10% and 25% of the total token supply. Allocating less than 10% may not raise enough capital, while more than 25% can create excessive sell pressure when vesting unlocks. The exact percentage should balance your funding needs with the long-term health of the token's distribution.
Technically yes, but it's highly unusual and often viewed negatively. A 'private sale' after launch is essentially a large OTC (over-the-counter) deal at a discount to market price, which can undermine public investor trust. It's better to raise all necessary private capital before the public launch to ensure a fair start for all participants.
Start within your network: angels, crypto founders, and community leaders. Engage with crypto-focused venture capital firms and investment DAOs. Platforms like Discord, Twitter, and crypto networking events are also key. Having a working prototype, a clear use case, and a strong team is essential to attract serious investment.
You have several options: 1) Extend the sale period, 2) Lower the minimum investment to attract more participants, 3) Reduce the total raise target and adjust your project scope, or 4) Cancel and return funds if the minimum viable raise isn't met. It's crucial to define these scenarios in your sale terms beforehand.
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