Equity crowdfunding has been in the news a lot lately.

When Elio Motors used Reg A+ rules under Title IV of the JOBS Act to raise almost $17 million from 6,500 mostly unaccredited investors, and subsequently listed on the OTC Markets (OTCQX: ELIO) back in February, it caught the attention of certain proud-to-be-regulated bastions of Wall Street who were both intrigued and alarmed at the same time.

How a company could legally raise millions of dollars without an underwriter, at a $300 million self-assigned valuation, and using StartEngine, an equity crowdfunding platform that was not a registered Broker-Dealer, was shocking.

Simultaneously, the fear of missing out, coupled with the desire to profit in a new era of online capital raising, has compelled capital markets players such as WR Hambrecht + Co., TriPoint Global Equities and Primary Capital to throw their hats in the ring. These early leaders – or maybe more accurately, explorers – are not going to watch the industry unfold from the sidelines.

Wall Street makes its case

With Reg A+ enabling authorized issuers to raise up to $50 million annually, the question is not if, but when – and more importantly, how – this milestone will be achieved. Could the first $50 million campaign be done through purely through an equity crowdfunding platform, following the example of Elio Motors?

Unlikely, according to Mark Elenowitz, CEO of TriPoint Global Equities and BANQ, an electronic investment banking platform that streamlines the matching of investors with quality growth companies.

“I do not believe that a platform alone can facilitate a $50 million raise,” says Elenowitz.

“Investors don’t wake up and say they want to buy stock. They still need to be sold. I believe the platforms will generate interest and investors will submit indications, but there is a conversion process that needs to occur.”

David Weild IV, the former vice chairman of NASDAQ and current CEO of Weild & Co., concurs.

“Reg A+ is simply a different form of disclosure from a traditional IPO,” says Weild. “It doesn’t absolve the company of having to develop an industrial-strength distribution plan. Platforms alone will generally be an insufficient distribution strategy for companies that need to raise significant money (more than $5-10 million).”

In addition to their distribution channels, investment banks can provide added credibility for Reg A+ issuers and positively differentiate them in the eyes of prospective investors.

“Because investment banks are highly regulated, their due diligence process is often extreme,” says Dara Albright, president of Dara Albright Media. “In that sense, I believe that they are also able to bring legitimacy to a deal – something that is not easily achieved through online channels.”

FinTech: Disruptor or accelerator in capital raising?

Equity crowdfunding, however, by definition, is the online offering of private company securities to a group of people for investment.

What Elio Motors demonstrated is that by employing a thoughtful digital marketing strategy, including paid, earned and owned media, combined with the power of effective storytelling and a built-in audience, companies can consciously bypass the traditional capital markets middlemen and go straight to the crowd – anyone over age 18, globally – for investment.

Through this campaign, a modern, digital-first method of securities marketing was born.

That said, Elenowitz’s point about the need for a conversion process is valid.

Elio Motors generated almost 12,000 indications of interest during its five-month “Test the Waters” phase, which allows issuers to generally solicit non-binding indications to gauge market demand in its offering.

With 6,500 people investing through StartEngine on a pure email marketing campaign to close them, 5,500 people ultimately did not buy stock. Had Elio engaged an investment bank, they potentially could have converted a higher percentage of indications through the investment bank’s Broker-Dealer network.

“Only a licensed Broker-Dealer can communicate with those potential investors and answer those questions,” says Elenowitz. Elio gained the ability to use a self-assigned valuation in its 1-A filing with the SEC, made possible under Reg A+.

This was likely worth the tradeoff for Elio, who would have had to defer its valuation to an investment bank had they gone down this path.

According to Elenowitz, “Broker-Dealers want companies that are appropriately priced in terms of valuation and would gain interest from investors, since they work on success and want to see a closing of the offering.”

Main Street + Wall Street: An Unlikely (but Powerful) Marriage

Maybe the answer to the $50 million crowdfunding equation is not one or the other – but both. In all likelihood, the first $50 million campaign will be transformational, involving a unique and previously unthinkable combination of direct to investor, retail brokerage and institutional distribution.

Wall Street and Main Street will invest together, using technology as an accelerant, because the future of securities marketing is destined to be hybrid.

The path to $50 million will require a fundamental shift in both the mechanics and psychology of traditional fundraising. Established capital markets players will need to acknowledge that unaccredited investors (who total 240 million in the United States alone) are now legally able to invest in private companies.

Furthermore, they need to understand and appreciate that the best way to reach this audience is online. From Albright’s perspective, “Traditional financial services providers do not need to fear FinTech. They need to embrace it, and learn how to use it to help them expand their businesses and increase assets under management.”

At the same time, platforms and select issuers, likely those with revenue and earnings growth, should not rule out traditional capital markers players in favor of pure-play technology solutions.

Weild says “I don’t see this becoming an online business any time soon. It is heavily dependent on access, service, research and human interaction. Bigger companies are still going to want the brand imprimatur of the big investment banks.”

There is no doubt that some companies will opt for a platform-only approach, wary of investment banks and desiring a streamlined online capital raise.

But to achieve $50 million, all the stars must align, and old forces and emerging technologies will need to smile, shake hands and work collaboratively in spirit of the issuer’s success.