In today’s Fintech Spotlight, we take a look at Elio Motor’s record crowdfunding campaign that was launched in StartEngine last month
With Regulation A+ of the JOBS Act going into effect last month and opening the doors for private companies to raise capital from non-accredited investors, it didn’t take long for the new laws to make a splash. Raising over $17 million since launching its crowdfunding campaign on June 19th on the StartEngine platform, Elio Motors has become the largest ever disclosed equity crowdfunding sale. Since surpassing their internal funding goals, Elio has raised their campaign with a current $25 million goal.
What’s interesting about the campaign is that it was run in tandem with the firm also raising money from accredited investors, using Rule 506 of Regulation D, with the firm having greater success with StartEngine. As such, the success can be considered to legitimize the potential of raising money from private investors. To learn more about the record campaign and how Elio Motors achieved its success, Finance Magnates connected with StartEngine's partner Ron Miller.
Secret Sauce of Equity Crowdfunding
Asked what Elio did right, Miller explained that the firm was successful in marketing its crowdfunding campaign to “create a really powerful marketing theme and mission.” This included creating lots of content, such as through collaborating with YouTube celebrities who test drove the car. In addition, with scores of customers having placed orders for the $6,800 car, Elio has a sizable community to market the crowdfunding campaign to.
Overall, Elio Motors had the ingredients for what Miller believed necessary to successfully meet goals on a crowdfunding campaign. According to Miller, there are three main requirements that firms should keep in mind before launching a campaign. Firstly, Miller stated that a company should “have a validated concept and product traction,” adding that it shouldn’t “just be a few kids and an idea.” Secondly, an established management team in place is needed that can execute the product mission. Thirdly, firms should have an established community to market to, or at least have the ability to create one.
Miller explained that these requirements are similar to expectations startups face when they approach investors for a late-stage or A-round funding. The requirement to be beyond the idea stage before soliciting capital from non-accredited investors is also partially due to the expenses involved. According to Miller, due to disclosure requirements of complying with Regulation A+, startups should expect to incur legal and accounting expenses of around $50,000 to $65,000.
While the costs may be considered restrictive to smaller startups there is an advantage to them for investors. The expenses incurred by startups could be considered a filter that will naturally remove less serious firms and more importantly scammers from launching crowdfunding campaigns.
Coming Secondary Market
Where crowdfunding is expected to become really interesting is when a secondary market forms. Currently, one of the risks is a lack of Liquidity for investors to exit their positions. As such, with limited opportunities to sell shares in private firms, crowdfunding investments are more or less locked up until a liquidity event or profits distribution take place.
StartEngine’s Ron Miller was bullish that we will soon see secondary marketplaces forming
A potential solution is the creation of secondary marketplaces where startup shares could be freely trade. In this regard, StartEngine’s Ron Miller was bullish that we will soon see such marketplaces forming. Specifically, Miller mentioned that an advantage of the Regulation A+ rules is that they allow for the immediate sale of shares. This contrasts with other forms of sales to private investors such as those that comply with Rule 506 of Regulation D.
As a result, Miller pointed out that momentum for the formation of secondary markets is taking place, with the topic currently being discussed at government level. In addition, OTC Markets, an operator of an electronic platform for OTC securities, has also been developing infrastructure for crowdfunded shares and presenting investor webinars about the subject.
Platform and Startup Relationship
In the long run, Miller expressed that crowdfunding platforms can be viewed as creating a turnkey solution for startups to raise capital. In this regard, campaigns are a “partnership between companies and platform,” and that’s what makes it work. To assist startups in making the fundraising procedure, many crowdfunding platforms also provide additional services related to the campaign. This can include in-house groups or referrals to outside marketing, legal and accounting firms. The best platforms also contain large investor communities for the actual fundraising.
In terms of StartEngine, Miller expressed that his firm believes one of their key advantages is that the company’s founders have backgrounds as entrepreneurs themselves which helps them understand the needs of startups. In addition, the firm has quickly developed a track record of successful campaigns allowing them to attract a growing community of investors. According to Miller, StartEngine has a strong group of firms in their pipeline and are in dialogue with about 15 other companies.
Fintech Spotlight is a new column on Finance Magnates devoted to reviewing innovative financial technology companies and sector trends.
With Regulation A+ of the JOBS Act going into effect last month and opening the doors for private companies to raise capital from non-accredited investors, it didn’t take long for the new laws to make a splash. Raising over $17 million since launching its crowdfunding campaign on June 19th on the StartEngine platform, Elio Motors has become the largest ever disclosed equity crowdfunding sale. Since surpassing their internal funding goals, Elio has raised their campaign with a current $25 million goal.
What’s interesting about the campaign is that it was run in tandem with the firm also raising money from accredited investors, using Rule 506 of Regulation D, with the firm having greater success with StartEngine. As such, the success can be considered to legitimize the potential of raising money from private investors. To learn more about the record campaign and how Elio Motors achieved its success, Finance Magnates connected with StartEngine's partner Ron Miller.
Secret Sauce of Equity Crowdfunding
Asked what Elio did right, Miller explained that the firm was successful in marketing its crowdfunding campaign to “create a really powerful marketing theme and mission.” This included creating lots of content, such as through collaborating with YouTube celebrities who test drove the car. In addition, with scores of customers having placed orders for the $6,800 car, Elio has a sizable community to market the crowdfunding campaign to.
Overall, Elio Motors had the ingredients for what Miller believed necessary to successfully meet goals on a crowdfunding campaign. According to Miller, there are three main requirements that firms should keep in mind before launching a campaign. Firstly, Miller stated that a company should “have a validated concept and product traction,” adding that it shouldn’t “just be a few kids and an idea.” Secondly, an established management team in place is needed that can execute the product mission. Thirdly, firms should have an established community to market to, or at least have the ability to create one.
Miller explained that these requirements are similar to expectations startups face when they approach investors for a late-stage or A-round funding. The requirement to be beyond the idea stage before soliciting capital from non-accredited investors is also partially due to the expenses involved. According to Miller, due to disclosure requirements of complying with Regulation A+, startups should expect to incur legal and accounting expenses of around $50,000 to $65,000.
While the costs may be considered restrictive to smaller startups there is an advantage to them for investors. The expenses incurred by startups could be considered a filter that will naturally remove less serious firms and more importantly scammers from launching crowdfunding campaigns.
Coming Secondary Market
Where crowdfunding is expected to become really interesting is when a secondary market forms. Currently, one of the risks is a lack of Liquidity for investors to exit their positions. As such, with limited opportunities to sell shares in private firms, crowdfunding investments are more or less locked up until a liquidity event or profits distribution take place.
StartEngine’s Ron Miller was bullish that we will soon see secondary marketplaces forming
A potential solution is the creation of secondary marketplaces where startup shares could be freely trade. In this regard, StartEngine’s Ron Miller was bullish that we will soon see such marketplaces forming. Specifically, Miller mentioned that an advantage of the Regulation A+ rules is that they allow for the immediate sale of shares. This contrasts with other forms of sales to private investors such as those that comply with Rule 506 of Regulation D.
As a result, Miller pointed out that momentum for the formation of secondary markets is taking place, with the topic currently being discussed at government level. In addition, OTC Markets, an operator of an electronic platform for OTC securities, has also been developing infrastructure for crowdfunded shares and presenting investor webinars about the subject.
Platform and Startup Relationship
In the long run, Miller expressed that crowdfunding platforms can be viewed as creating a turnkey solution for startups to raise capital. In this regard, campaigns are a “partnership between companies and platform,” and that’s what makes it work. To assist startups in making the fundraising procedure, many crowdfunding platforms also provide additional services related to the campaign. This can include in-house groups or referrals to outside marketing, legal and accounting firms. The best platforms also contain large investor communities for the actual fundraising.
In terms of StartEngine, Miller expressed that his firm believes one of their key advantages is that the company’s founders have backgrounds as entrepreneurs themselves which helps them understand the needs of startups. In addition, the firm has quickly developed a track record of successful campaigns allowing them to attract a growing community of investors. According to Miller, StartEngine has a strong group of firms in their pipeline and are in dialogue with about 15 other companies.
Fintech Spotlight is a new column on Finance Magnates devoted to reviewing innovative financial technology companies and sector trends.
Crypto Gets Second Chance: Stripe Re-enters the Sector with Stablecoins
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
Follow FMevents across our social media platforms for news, insights, and event updates. Connect with us today:
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
#fmas24 #fmas #fmevents #financeinafrica #traders #investors #affiliates #forexTraders #investmentOpportunities #B2BNetworking #finTech #Innovations #TradingCommunity #BusinessOpportunities #AfricanBusiness #Johannesburg #southafrica
📣 Stay updated with the latest in finance and trading!
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Looking to expand your network in #Africa?
Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
Sandton Convention Center, Sandton, South Africa
Register now to secure your spot: https://bit.ly/3JbUpCK
#fmas #fmas24 #fmevents #networking #finance #africa
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
This content is provided solely for general informational purposes and should not be construed as financial product advice or an investment recommendation. It has been prepared without considering your personal circumstances.
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