SHREVEPORT, LA (KSLA) - Elio Motors is trying a new way to raise the money it desperately needs to start production. Elio Motors has launched an investment option that will allow people to buy into the start up for a minimum of $15,000 dollars.
However, federal regulations won't allow just anyone to invest and the fundraising tactic has both supporters and skeptics talking.
Deborah McAteer of Marshall, Texas is an avid supporter of Elio Motors. She has put $1,000 down to hold her place in line to get the three wheeled vehicle. She is number 18 out of more than 40,000 people who have done the same.
"Think about it, the massive kind of company it could become, that would be awesome to be one of the first," said McAteer.
She and a select few other reservation holders, who are invited to a virtual town hall with Elio company leaders each quarter, have been brainstorming fundraising options for the company whose biggest obstacle is a lack of money.
"We have been requesting a way to do it and he found a way to do it," said McAteer.
"For a long time I've been asked, can I invest in Elio?" Elio Motors CEO Paul Elio told KSLA News 12.
Elio says they recently discovered a way to allow approved investors to buy into the startup for a minimum of $15,000 dollars with a 506 (c) investment option. It's made possible by the JOBS Act, passed in 2012.
"Once we became aware of this opportunity, it just seemed like a natural fit for what we are doing," said Elio.
However, Louisiana State University-Shreveport finance professor Tim Vines says federal regulations will only allow certain people to invest.
"There are rules the security and exchange commission has, that allows them to offer it to so-called sophisticated investors," he said.
Those investors must have $1 million in assets, not including their home, or have two years of income of at least $200,000 per individual or $300,000 for a family to invest.
"It is not appropriate for everyone, that's why the government insists you be accredited, but if you are accredited, please take a look," Elio said.
Despite the tough criteria, the company mass emailed all reservation holders, extending the option to them, a day before the option was revealed to the general public. The email was met with different reactions.
"First I was shocked," said Roger Wildermuth, who has put down $1,000 to reserve an Elio vehicle.
Wildermuth is not happy with the company, claiming they have blocked him from their official Facebook page for asking tough questions.
"There is absolutely no way Elio Motors is going to get another penny of my money, even if it is for a t-shirt," he said.
On the other hand, McAteer is considering the idea.
"I don't know if I'm qualified, but I'm looking into it," she said.
According to Elio, the reaction to the investment option has been overwhelmingly positive.
"We've had a really good reaction, we've had a lot of traction on the website, downloading documents, and that kind of thing, better than I would be anticipated," said Elio.
Vines says from a financial perspective, any company that is just starting out, that doesn't have a proven track record and hasn't produced any products is a high risk investment.
"But you have to remember, there are lots of start up companies, only a few of them turn out to be Google or IBM," said Vines.
However, he said if a few factors in a person's life are right, investing might not be a bad idea.
"If somebody has already taken care of their basic retirement needs, if they are sure they are going to have the income they need when they are not going to work anymore and they have extra money, if they were interested in this idea, I think it would be fine," Vines said.
According to Elio, anyone interested in learning about investing in the company can go to the Elio Motors website and click on the "Investor Inquiries" tab.
At last check, Elio Motors still needs about $240 million to be able to start production. The company has said they hope to start production during the first half of 2016 at the old GM plant in Shreveport.