Elio Motors is crowdfunding its entire $25M investment round

1) Removing rules in any industry will almost always lead to increased "efficiency" in some manner. That's just a mathematical function of less layers in the way.

2) Airbnb, Uber and others did not "remove" the rules and oversight. They're just skirting the law and are not completely legal nor right in every market. We haven't seen anything final on how these companies will be regulated in the future nor what happens due to the various loopholes they create in consumer protection.

3) Airbnb, Uber and others deliver something in exchange for your purchase and fall under the basic commitment of all companies who provide products/service to not just take the money and run. They're also relatively small purchases with no lasting damages.

4) Finance is much more complicated and regulations are necessary for consumer protection, especially when dealing with something like cash that can have direct and lasting impact on people's lives with the amount invested and the reliance on future stability and returns. Like the other comments have said, it's been proven over and over again that deregulating actions can cause massive fraud and losses.

This is the same reason we have regulations for medical practice and law and banking and countless other situations where safety is paramount, even at the cost of some inefficiency.

The problem is that startup investing is nothing at all like investing in public company stocks.

Venture capitalists don't back a single company. The majority of startups fail. Pushing all your chips in on a single startup is like going all in on a queen high hand. Instead, VCs invest in whole portfolios of companies.

But that's not the only difference. Because most companies fail, there's a theme to VC investment theses. And it's not obvious, because it drives founders (who are atypically savvy about startups) batshit. It's this: the winners have to pay for the losers. A decent shot at a 2x return sounds like a no-brainer, but it isn't. The returns on the wins have to be so good that they make up for all the failures.

Then there's dealflow. Good VCs get preferred access to the good startups. Most startups that raise money --- and all the startups that fit the "win will pay for other losers" mold --- plan on taking more money. If your first round is low 7 figures, your second round is going to be 8 figures, and probably not crowd-based! If you know you're going back to PE/VC for money, you care about who take money from this time. So if you can take money from Sequoia, you do. Sequoia gets the best deals, and crowd-funders get adversely selected into crappier deals.

Most VC funds lose money. Those are funds whose investments come with control --- something no crowdfunding investor gets. They can fire the CEO. They get bespoke due diligence, not to mention the VC's network of other firms to syndicate with on future investments. And when they close a deal, they tend to get preferences built in. Despite all those advantages, they still lose money. Crowd-investors get none of those things. Why would they do better?

This is before we get into how comically subordinate common shareholders of private companies are. Startups routinely do things that would generate shareholder lawsuits in public companies. They get to do those things because they are taking money from people who know the game. Consenting adults. The crowdfunding public can't do that.

And finally, why do we grant the premise that normal people are capable of selecting startups to invest in? They're not even able to do that with public companies. In 2015, companies listed on the major stock markets have proven an ability to drive revenue. We know where their money comes from. Venture capitalists have to prognosticate about that. How are normal people supposed to compete with them?

It's just a bad idea.