#274: Elio Motors 'Tests The Waters' And Finds $27 Million
August 6, 2015 - Read the full Forbes article and watch the interview here: http://onforb.es/1MbEUIU. Subscribe to this podcast on iTunes by clicking here: http://bit.ly/ymotwitunes or on Stitcher by clicking here: http://bit.ly/ymotwstitcher. Elio Motors seems to have found the capital it needs to launch the most revolutionary car since the Tesla Model S was introduced. The $6,800, three-wheeled car is designed principally for commuting and will get 84 an estimated miles per gallon. Capitalizing the venture has seemed tricky, but new rules promulgated by the Securities and Exchange Commission governing Regulation A offerings created an interesting “test the waters” option that allows an issuer to gauge market interest in an offering demonstrated plenty of interest. Over $27 million of interest was expressed. Regulation A+ as the new rules are being called, gives ordinary rather than “accredited” or wealthy investors the opportunity to invest in early stage companies. The bulk of the investment interest in Elio was from people who are interested in buying a $6,800 car—not the venture capital set. Ronald Miller, CEO of StartEngine, the crowdfunding site that is working with Elio Motors, notes, “Equity Crowdfunding under Reg A+ is the greatest advancement for entrepreneurship in a generation. Since access to capital is the greatest barrier to bringing innovations to the market, leveling the playing field for investors and founders alike is a real game changer.” Miller explains the concept of equity crowdfunding, as demonstrated by the Elio effort, “As traditional media dies, social becomes the new marketing power of today’s corporations. Now, for the first time, companies can engage their customers to become investors who then become brand ambassadors who push the companies messaging out to their social networks”. “With Reg A+, Congress has finally opened the door to the other 92% of the population that never had a chance to invest in the next big thing like Google GOOGL -0.89%, Facebook and PayPal ,” Miller adds. Miller sees this as both a practical and a social problem. He notes, “The only ones saying that there is a lot of money available to startups are the VC’s. Unless you are white male and previously had a successful exit from a VC backed company, your chances of getting funded by a VC are about zero.” Paul Elio, the founder and CEO of Elio Motors, feels much the same way, noting, “I wanted to own a car company from the time I was 8-years old. Realistically, I had a better shot at becoming a professional athlete.” “It was 2008, gas prices were through the roof and wealth was pouring out of our country. Every night, I’d come home and watch the news and get angry about what was happening. I decided to do something about it,” Elio explains. “Elio Motors is dedicated to creating American jobs and working to make our manufacturing sector and our economy stronger.” Please consider whether a friend or colleague might benefit from this piece and, if so, share it.