Startup automaker Elio Motors made it official on Thursday: The Phoenix-based manufacturer of an aerodynamic, three-wheel car became the first small company to list shares on an exchange, following a mini-IPO made possible by new Securities and Exchange Commission rules.

The public offering is a success story that follows years of finagling by regulators, policymakers, and business owners to try to make good on the full promise of the 2012 Jumpstart Our Business Startups (JOBS) Act, which was intended to increase funding and growth opportunities during the recession. The news is important because it shows how the updated regulations can work in favor of small companies, allowing them to raise money in new ways, such as through crowdfunding platforms, and from a previously inaccessible class of small investors.

"We have lost the meaning of the equity markets, when people were trading stocks at the corner of Wall and Broad Street under a tree," founder Paul Elio said at a news conference in New York. "[The new rules] bring the equity market back to its roots, which is about creating capital for companies to start and grow."

The Financial Industry Regulatory Authority (FINRA) gave Elio final approval to begin trading on the OTCQX Market, an exchange that charges businesses a fraction of what larger exchanges such as Nasdaq do to list their shares. That follows an extensive campaign the company initiated last summer on the crowdfunding platform StartEngine, in which it raised $17 million from 6,600 unaccredited investors. (An unaccredited investor has a net worth of less than $1 million, or an annual income less than $200,000.)

In June, the SEC altered a decades-old rule called Regulation A, which allowed private companies to solicit funding from wealthy investors for up to $5 million. The update, called Regulation A+, allows private companies to raise money in two tiers, for amounts up to $20 million and $50 million, including from non-accredited investors.

"Regulation A+ is the great gift of the Great Recession," said Ron Miller, the chief executive of StartEngine, and a serial entrepreneur himself. Regulation A+ was proposed as part of the JOBS Act, in a provision called Title IV. 

In October, the SEC took things a step further, approving new regulations under Title III of the JOBS Act, which will let unaccredited investors purchase shares in companies that want to raise even smaller amounts of up to $1 million per year. Those changes are slated to go into effect in May, following a public review.

Meanwhile, Elio has bucked the recently sagging stock market. The company priced its shares at $12, and saw a first-day pop of nearly 17 percent. Its shares were trading at $16.50 by midday on Thursday.

The extra liquidity should help Elio fulfill its big plans to sell its cars, which are slated for delivery in late 2016, according to a company spokesman. The cars have an affordable price tag of $6,800 and, the company says, extreme fuel efficiency of 84 miles per gallon. Those features conceivably could give manufacturers of more expensive electric cars--including Tesla, whose lowest-priced vehicle currently costs about $70,000--some new competition.

The low price will certainly be appealing to many consumers, particularly those who are less upmarket than the typical Tesla buyer, says James Gillette, an independent automobile industry analyst in Grand Rapids, Michigan. Still, he says, "I am skeptical [Elio] can make money doing this."

Elio says it has preorders for 50,000 cars, which it plans to build in a 4-million-square-foot facility in Shreveport, Louisiana. Once those are filled, it expects to distribute its vehicles within 24 hours of receiving an order through a network of 120 bricks-and-mortar showrooms in strip malls, which it is still assembling.

"This is just the tip of the iceberg," Elio said. "It marks a fundamental shift in our economy, and for the small businesses that drive our economy and jobs growth."

Correction: An earlier version of this article stated that the Securities and Exchange Commission gave Elio final approval to begin trading on the OTCQX Market. It was FINRA, the Financial Industry Regulatory Authority.

Published on: Feb 25, 2016