Send Email To Dop To Show Support For Elio Motors Loan.

[Jeff Porter]

Let me make a few friendly amendments (because I think you have absolutely nailed the key points):
Paul and his founding investors are taking a quiz:
1. Choose one of the following:

A. Get an ATVM loan and -
1) Maintain control of their company - no ownership dilution.
2) Pay it back when EM can. Risk attaches to the company, not individuals.
3) Founding investors' reserve their uncommitted money for other contingencies and/or opportunities.
4) Founding investors invest their funds in other investment opportunities at >4% return (readily available to VCs/Angels/private equity investors), diversifying their investment portfolios and reducing personal risk.

B. Take more Founding Investors' money or additional secondary investors' money and -
1) Pay them a greater portion of profit....forever.
2) Founding investors suffer ownership dilution, reduced ROI on their original investments.
3) Founding investors increase their personal risk with investment concentration.
4) Secondary investors could demand greater concessions for late cash infusion, furthering dilution or ROI reduction.
5) Risk of additional investment attaches to individuals, not EM.
6) Sale of stock only way for investors to take money off the table > Capital gains taxes, share price risk, market flood
C. Give up.

I absolutely love the discussion and the speculation because it really is tremendously educational - especially for those who might not have experience in this arena. But the risk is that many can be left with an impression that the funding strategy is much more complicated than I think it really is.

Option A is the only option that makes sense at this time - for Paul as well as all of his founding investors. There really is no other play as long as the ATVM loan is still on the table.

Very educational for me for sure! Can't thank everyone enough, for putting in their experience, knowledge and opinions. Muchas gracias.

I'm a bottom-line guy, so here's my take on the bottom line, of why it makes sense to wait on the ATVM loan and ignore any further private investment offers. Any private investment money from this point forward will come with ownership dilution for PE and existing private investors, meaning there's no way that future investment funding offers would be willing to take less/smaller piece of the overall pie. Also, there's no threat to start of production if the ATVM loan doesn't happen, or doesn't come through by let's say August.

Am I demonstrating understanding?

One aspect just popped in my mind: this "pie" has potential for millions and millions of dollars. Is it unfair to say that greed is a major reason why PE and existing investors want to keep other investors out? Can't a person live on 20 million dollars as well as they live on 30 million dollars?

I suppose that as long as their is no risk to production starting, there's no need to decrease existing owners' piece of the pie to guarantee production happens.

 

[Ty]

Very educational for me for sure! Can't thank everyone enough, for putting in their experience, knowledge and opinions. Muchas gracias.

I'm a bottom-line guy, so here's my take on the bottom line, of why it makes sense to wait on the ATVM loan and ignore any further private investment offers. Any private investment money from this point forward will come with ownership dilution for PE and existing private investors, meaning there's no way that future investment funding offers would be willing to take less/smaller piece of the overall pie. Also, there's no threat to start of production if the ATVM loan doesn't happen, or doesn't come through by let's say August.

Am I demonstrating understanding?

One aspect just popped in my mind: this "pie" has potential for millions and millions of dollars. Is it unfair to say that greed is a major reason why PE and existing investors want to keep other investors out? Can't a person live on 20 million dollars as well as they live on 30 million dollars?

I suppose that as long as their is no risto to production starting, there's no need to decrease existing owners' piece of the pie to guarantee production happens.

I think you've got it. What the Loan could mean to Elio is that they would have enough funds available to start production with enough "parts" to build vehicles as fast as the main production line would allow. It they don't have that money, they could be constrained in the number of "parts" available. Look at it this way - IF casting the engine was the slowest process in part procurement, Elio can only build Elios as fast as they can cast motors until they generate enough income to buy a second casting operation ( or several... whatever). The loan allows them to hit the ground running.

I would be willing to bet that Paul Elio has either someone or some people who have expressed interest in investing in the company. Paul probably wants to see if he can fund the company without having to give away part of it.

 

[tonyspumoni]

Never underestimate the power of fear and of greed and of the particularly potent mixture of fear and greed together. Every one of those board members has serious skin in this game - that is greed. Other motives notwithstanding, they are in this at least in part because it represents a terrific opportunity to maybe make a gynormous pile of money. But they can only make that pile if this venture goes. How big the pile is in part depends on how well EM goes and how well it goes in turn depends upon meeting present and future customer expectations. Why you ask? Because they didn't market this any ol' way - no they did not. They did this by a deliberate and sophisticated effort at grass roots marketing combined with a steadfast adherence to four principal design goals: 84 mgp, $6800, and two other things I forgot (homage to Rick Perry who only can't remember one thing - what can I say, it's Friday night and I raided the wife wine cellar?). Any expectation unmet will be viewed as disappointment and disappointment, if sustained, will again threaten demand. Demand, if threatened, will reduce the potential size of that gynormous pile of potential money.

What am I saying? That the primary investors are waaaaaaaay more 'all in' than us all-in'ers. If they fail to make this go, ATVM or not, and on time, their initial stake may be in serious jeapordy and this will make them afriad. Either they or theirs have deep pockets and they or theirs got themselves into this by greed. We can be sure of one thing: they will get themselves out and we will get our Elios because of fear. Fear that if they f**k this up now, their beautiful potential pile of money will be an actual tax write off.

Name the last good Russian invention. The reason we invent shit, is because of greed and fear. Greed gets us to bite the hook - fear keeps us hanging on. America the Beautiful. Go Elio.

 

[Rickb]

Greed is not the driving force behind Elio Motors. If that were the case The Elio would be still priced at the 2009 Hello Elio Campaign's advertised base price of $7200 as I recall. We would still be happy as clams!

Elio is looking for fair profit.......a whole new business model that is difficult to grasp. Fear and greed? I don't think that's part of the Elio business equation.

The investors behind Elio have diverse portfolios.....they win some......they lose some. Heck, their investment risk is comparable to the average guy's all in $1K investment risk. It's less signifcant to the rich because they have other investments to balance out any loses. Just a thought and I could be wrong.

 

[zelio]

Greed is not the driving force behind Elio Motors. If that were the case The Elio would be still priced at the 2009 Hello Elio Campaign's advertised base price of $7200 as I recall. We would still be happy as clams!

Elio is looking for fair profit.......a whole new business model that is difficult to grasp. Fear and greed? I don't think that's part of the Elio business equation.

The investors behind Elio have diverse portfolios.....they win some......they lose some. Heck, their investment risk is comparable to the average guy's all in $1K investment risk. It's less signifcant to the rich because they have other investments to balance out any loses. Just a thought and I could be wrong.

I have the same impression as Rickb. If they were all about greed they would not be focusing on something that helps low income people live a better life. :-) Z

 

[tonyspumoni]

I did not say that these folks were simple. I omitted as off-topic the idea that these people would also have other, more altruistic motives. But do not think that their motives would remain altruistic should this thing go belly up, in which case they will care a great deel indeed about the money.

The closer that time draws and the more opaque ATVM loan timing becomes, the more convinced I am that the original investors provided enough funding to get the Elio into production on schedule, as promised.

 

[zelio]

I did not say that these folks were simple. I omitted as off-topic the idea that these people would also have other, more altruistic motives. But do not think that their motives would remain altruistic should this thing go belly up, in which case they will care a great deel indeed about the money.

The closer that time draws and the more opaque ATVM loan timing becomes, the more convinced I am that the original investors provided enough funding to get the Elio into production on schedule, as promised.

Financial situation: What is the financial situation of Elio Motors?
September 22, 2014 22:58

1. Elio Motors
   
2. The source for all your Elio Motors questions
   
3. Knowledge Base

Elio Motors has been blessed with some core investors who have great resources available to them. One can just take a look at our board of investors to get a better understanding of the weight that is behind our mission. From Stu Lichter, the CEO of Investor Resources Group (the #2 commercial real estate group in the nation), to Jim Holden, the former CEO of Chrysler, Ken Way, the former CEO of Lear Seating (the company that provides 40% of all vehicle seats in the world), to David Schembri, a former Mercedes Benz executive and first President of smartUSA, we recognize that we are quite fortunate! Our management team in conjunction with our board of directors inspires a commensurate level of investment level expertise for moving forward.

Our overall strategy takes us well through year one of production and includes many pieces such that if one piece is not successful we have sufficient alternative pieces that are ready to fall into place. Most significantly, our investors are just as excited as you about our project, and therefore they are determined to make sure that we are successful- something that is wonderful to have behind us. As structured, we are extremely confident with our financial game plan, and we do recognize that this information will help you better understand who we are and how we are going to be successful where others have failed. While we are providing you with a macro level view of our finances, please know that our investors themselves have the micro level details and that our financial statement is strong.

:-) Z

 

[tonyspumoni]

Then the ATVM loan issue is a sideshow and we may henceforth consider it irrelevant. 'Strategy' is an odd way to suggest that the resources to which they refer are solid, rather than future ones acquired through execution of that vision. It is one thing to say 'our strategy is to.....' and another to say 'I already have'. Paul has emphasized the importance of the ATVM loan to his emerging business strategy but has yet to articulate why. If they have enough money now to get through production, say so along with what further purpose the ATVM loan exactly serves.

 

[Elio Amazed]

Then the ATVM loan issue is a sideshow and we may henceforth consider it irrelevant. 'Strategy' is an odd way to suggest that the resources to which they refer are solid, rather than future ones acquired through execution of that vision. It is one thing to say 'our strategy is to.....' and another to say 'I already have'. Paul has emphasized the importance of the ATVM loan to his emerging business strategy but has yet to articulate why. If they have enough money now to get through production, say so along with what further purpose the ATVM loan exactly serves.

Exactly Tony.
I sincerely thank Z for finding and posting this.
I was totally unaware that this was said way back then.

To quote the quote that Z quoted, "Our overall strategy takes us well through year one of production..."
Let's look at that again.
That was, "Our overall strategy", and not "The funding that we already know for a 100% certainty that we will have access to..."
We have to really be careful how we read these releases and what we choose to read into them.
They are, after all, composed and written with great attention and care given to the selection of details and semantics.
One result of their being so continuously vague is that each of us can take what they do say to mean whatever we wish it to mean.
That is exactly according to plan and is public relations, promotion, and the turning of a phrase at it's most masterful.
I, for one, am pleased beyond words that we have this kind of talent at the helm.
If you look back, this has been a pattern through the whole campaign.

I don't think EM wants to crystal clearly and completely imply that they "don neeed no stinking loans man".
That might just lead the feds into thinking, "Then, really, why should we give these guys a loan?"
But, on the other hand, the public needs to believe EM has plans upon plans to insure that it won't let the public down.
Tony, I thnk you knew and stated the answer to that a few threads ago.
The more it looks like a sure payback, the more it looks like things will not turn out like the last two DOE loan disasters.
And the better the chance are that 'America will realize just how many heroic geniuses have been hidden away at the DOE all this time'.

I see a similar situation in Saddam's telling the world that he had WMDs because he was afraid of Iran.
Unfortunately for him, he couldn't trust the U.S. enough to secretly whisper to our government that he, in fact, did not have any WMDs.
EM seems pretty unified in everything they're doing and in the course they've plotted for the near future.
I just believe that they're having to serve at least two masters and they need to walk a line between them for now.

Another aspect of EM's being vague is that it's good to keep us wondering and on the edge of our collective seats.
How do I keep people tuned in to my station and talking about my program so that my fame will spread throughout the land?
Serial Westerns and Mysteries, Soap Operas, "Reality Shows", and Talk Shows. Got to keep it stirred up a little out here.
Some information must be given away when it becomes necessary, but you seldom give more away than you have to.

And, of course, there's that real thing about the investors' collective desire for privacy at this point in time.

Brilliant. THAT'S why I have faith. THAT'S why I'm "All in".
For as much as I'm all in for the money and the car itself...
I'm in it for the identity and the belonging to something greater than myself.
I'm in it for the unique experience, the history, and the entertainment.

You simply cannot put a price on this kind of entertainment. Sitting back and watching it aaaaall happen.

 

[ks6c]

Very educational for me for sure! Can't thank everyone enough, for putting in their experience, knowledge and opinions. Muchas gracias.

I'm a bottom-line guy, so here's my take on the bottom line, of why it makes sense to wait on the ATVM loan and ignore any further private investment offers. Any private investment money from this point forward will come with ownership dilution for PE and existing private investors, meaning there's no way that future investment funding offers would be willing to take less/smaller piece of the overall pie. Also, there's no threat to start of production if the ATVM loan doesn't happen, or doesn't come through by let's say August.

Am I demonstrating understanding?

One aspect just popped in my mind: this "pie" has potential for millions and millions of dollars. Is it unfair to say that greed is a major reason why PE and existing investors want to keep other investors out? Can't a person live on 20 million dollars as well as they live on 30 million dollars?

I suppose that as long as their is no risk to production starting, there's no need to decrease existing owners' piece of the pie to guarantee production happens.

Absolutely, Jeff - major understanding! I would only make one little tweak...

I'm going to assume that PE is the idea guy/prime mover with pockets not quite as deep as his other founding investors. I'm also willing to bet his founding investors haven't found the bottoms of their deeper pockets, yet <grin>

IF (big IF) the additional private investment money comes from those founding investors (assuming deeper pockets) and PE can't match their additional contributions, the founding investors would actually see an ownership increase while only PE could (would?) see ownership dilution.

So, I see the ATVM loan as the vehicle for the founding investors to keep more of their personal money off the table (reducing risk) and as PE's vehicle for avoiding dilution. Rather simple.

Greed? I don't think I'd label it that (though I do believe in Gordon Gekko's "greed is good" quote, just not his execution) - if EM is extremely successful, PE will end up with a boat-load of money. Who knows, maybe he'll also become extremely philanthropic with his newly minted fortune and no one will label him greedy. But this isn't a sure thing, yet, so he could just be preserving a larger piece of a potentially smaller pie. Time will tell - but I'm betting on extremely successful and extremely philanthropic based on all that PE has demonstrated through actions and deeds (not just words) to this point.

I would also add that the vast majority of the discussion in this thread is a perfect description of how money moves in the start-up world - a lot of smart/experienced folks have really contributed for the benefit of forum members. The game-changer here is the ATVM loan, accessible only to a small niche of companies, and granted only to an infinitesimally smaller favored few. That gives PE/Founding Investors/EM a low-risk funding path not available to most.