Fearless.
That’s how I’d describe the first person to sail across the ocean…
Or dive to the bottom of the sea…
Or strap themselves to a rocket and launch into space.
But after these pioneers returned home—not just safe and sound, but exhilarated and hailed as victors—countless others were inspired to follow in their footsteps.
Last week, a different type of pioneer, an entrepreneur, took a fearless plunge…
And as others dive in behind him, it might lead to an unexpected benefit for you:
It might make you rich.
Meet Paul Elio
Paul Elio is the Founder & CEO of Elio Motors, a new automaker based in Phoenix, Arizona.
Mr. Elio aims to build an “ultra-high-mileage” two-seater car with an expected sticker price of $6,800.
With glowing press from The Wall Street Journal and Forbes, a board of directors that includes the former CEO of DaimlerChrysler, and $290 million in pre-orders, Elio’s car is a bold attempt to change the face of transportation.
To start building cars at his new factory in Shreveport, Louisiana (it was previously a manufacturing site for General Motors), Elio needed $25 million.
Instead of relying on the usual funding sources—venture capitalists, banks, or wealthy angels—Elio decided to take a newer and riskier approach:
He turned to regular individual investors like you.
The Mini-IPO
As long-time Crowdability readers already know, on June 19, 2015, one of the key provisions of what’s called “the JOBS Act” went into effect.
Every U.S. citizen is now allowed to invest in privately-held “start-up” companies like Elio. It no longer matters how much you earn, or how much you’re worth.
This is good news for you…
You see, over the past ten years or so, there’s been a big change:
In today’s market, most of a company's investment gains take place when the company is still private. To see what we mean, take a look at this chart:
As this chart shows, to capture big returns nowadays, it’s essential that you invest in fast-growing companies while they're still private—and because of the JOBS Act, now you can.
Officially, the legal provision that went live in June is called “Regulation A+,” but since it’s similar to a small Initial Public Offering (IPO), we call it a “Mini-IPO.”
Any U.S. business can take advantage of Mini-IPOs to raise capital from investors like you, but due to the relatively high legal costs of this approach, the most likely candidates are later-stage start-ups. Later-stage start-ups have revenues, as well as a significant staff, so they’re better equipped to handle the procedures and costs.
Elio Motors was one of the very first companies to use this bold new approach…
So now let’s look at how the Mini-IPO process works, using Elio as an example.
It Starts with “Testing the Waters”
Before Paul Elio made the official decision to proceed with an expensive Mini-IPO process, he leveraged a provision of Regulation A+ that allowed him to gauge investor interest beforehand.
This process of gauging interest is called “Testing the Waters.” To test the waters, Elio posted a description of his business online and allowed investors like you to take a look.
You couldn’t actually buy shares at this point, but if you liked what you saw, you could “reserve” shares. Since these were “non-binding” commitments, you were free to back out later if you wanted to; you had no obligation.
Although the minimum reservation was just a few hundred dollars, before long, Elio had gathered $46 million of interest.
Based on what he perceived to be a high level of interest, Elio decided to move forward with his plan: he sought approval from the U.S. Securities and Exchange Commission (the “SEC”) to actually start selling shares.
It took the SEC a few months to review the filing. Once it was approved, Elio went back to the folks who indicated interest and asked them if they wanted to invest.
Of the $46 million Elio received in non-binding commitments, as of today, about $16 million of it has already turned into actual dollars.
That’s an impressive outcome.
Are You Ready?
And we're not the only ones who are impressed with these results…
So are entrepreneurs.
Now that they’ve seen proof that Mini-IPOs can provide substantial dollars for their business, more and more of them are lining up to follow in Elio’s fearless footsteps.
So, over the next few weeks, we plan to introduce you to some of these entrepreneurs and tell you about their businesses. If you're interested, you'll be able to invest.
In the meantime, if you'd like to learn more about Mini-IPOs, check out this video we made for you »
Please note: Crowdability has no relationship with Elio, or with any of the companies or platforms we write about. Crowdability is an independent provider of education, information and research on start-ups and alternative investments.
Best Regards,
Founder
Crowdability.com
