What is a Softcap and what happens if its not reached?

You often see this term circulating around ICOs and IEOs. What is a softcap stand and what happens if a company cannot reach it?

What is a softcap?

A softcap stands for the minimum amount of money a cryptocurrency startup needs to raise, through an ICO/IEO, in order to successfully follow their roadmap and create a viable product.

What happens when a softcap is not reached?

In most cases, when a softcap is not reached during an initial coin offering, the founders refund all early investors and postpone or cancel the funding of their project idea.

Where can I see an ICO/IEO’s softcap?

You can find out what softcap a cryptocurrency startup has set for its upcoming initial coin/exchange offering by reading through their whitepaper. 

Usually, the initial coin sales will come at a discounted price, compared with later rounds, after the softcap has already been reached. Therefore, if you decide to join a token sale that has not yet reached its softcap, you will most likely receive a discount.

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