F-U-N-D-E-D: Tesla-wannabe Elio Motors raises big from the crowd -- or did it?

Lately, Paul Elio's dream of building the next Tesla seems like it's getting a lot closer to reality.

Since he launched Elio Motors in 2008 with the improbable idea of mass-producing a two-seat, three-wheel vehicle that gets 84 miles to the gallon and retails for $6,800, Elio -- a former auto engineer -- has been trying to raise the $300 million he estimates he needs to actually build it.

Elio had already raised $70 million toward his goal by the middle of last month when he began asking the masses to take advantage of just-enacted federal investment rules allowing them to invest in private companies -- like startups -- using crowdfunding site StartEngine.

So on Monday, when StartEngine reported that nearly 6,000 people had expressed interest in giving the company $25 million within the last month, Elio's crowdfunding campaign looked like a runaway funding success story.

But as Elio and StartEngine realized, the amount of the crowd's actual investment might be inflated -- dramatically -- by pranksters.

"We had $3.6 million of reservations that we didn't think were legitimate," said Elio, noting that one blogger, who went by the name Superman, reserved $500,000 of company stock. "It looks like another $1 million creeped in today."

How much of the now $22.4 million ponied up by investors is real? Elio doesn't know. Worse, he might not know for months as he waits for the Securities and Exchange Commission to vet the company's paperwork and formally approve sales of shares in the private company.

As one of the first startups to take advantage of the federal investment rules that went into effect in June, Elio's experience puts it on the leading (and bleeding) edge of crowdfunding, where the rules of the game are in flux and timelines are unpredictable. When they're not phantoms or pseudonymous pranksters, the new class of investors have little experience -- yet many of the investments available to them require a lot of it.

Even so, interest in investing in startups via crowdfunding appears to be surging, at least according to early anecdotes from crowdfunding sites. What's still unclear is whether this type of crowdfunding will give Americans a chance at a windfall investment they would have otherwise been excluded from or whether it will leave them owning shares of a worthless company that experienced investors would never have touched in the first place.

Crowdfunding sites like Kickstarter, Indiegogo, GoFundMe and RocketHub abound online, offering budding entrepreneurs ways to fund their projects via the crowd rather than Silicon Valley's moneyed guard of venture capitalists. Kickstarter, for example, says that 89,012 projects have collected about $1.8 billion from the digital crowd using its platform.

But those sites allow donations, not investments. Less common among crowdfunding sites are those that offer ownership; and those that do have been restricted to offering ownership to all but the richest 3.5 percent of American households who are rich enough qualify as accredited investors. (To be one of those, you need to either make at least $200,000 or have assets beyond a house that are worth more than $1 million.)

That situation changed on June 19 with a new rule change, Regulation A+, effectively allowing 118.7 million American families to begin the process of buying shares in private companies like startups.

It's unclear today how many crowdfunding sites have opened investments to the masses. For now though, two of the biggest players aren't changing course. Kickstarter has maintained that it has no plans to offer equity, while Indiegogo has hinted only that it might consider it.

And while the giants of crowdfunding are watching how the new rules play out, smaller sites are still testing the waters. Los Angeles-based StartEngine, which was founded by former Activision co-founder Howard Marks in 2011 as a tech accelerator, has expanded the number of companies that average investors can buy into from just Elio Motors to three other startups.

StartEngine's CEO, Ron Miller, says he can't validate each individual investor at this point, making it difficult to know how much of the investments users have pledged is real. However, he says StartEngine is "in the middle of screening" for investment pledges above $20,000.

Like StartEngine, SeedInvest also opened up its investments to the masses last month when it began allowing them to reserve interest in buying into WayBetter, a startup that runs a health website called DietBet. Within 48 hours of opening WayBetter to the crowd, the New York-based crowdfunder reported that 3,171 people pledged to invest $9.3 million into the company.

"As soon as WayBetter tested the waters, we were flooded with other companies that were interested," said SeedInvest co-founder and CEO Ryan Feit. He said he's already looking at making other startups available for mass investment sometime this year.

Buyer beware

But Feit also warns that investing in startups isn't for everyone. And there's one major reason: buying shares will be a lot easier than selling them.

In theory, if you buy shares of Elio or any other startup that's raising capital using an online crowdfunding site, you can also sell them. But in practice, that's not how it works out. Unlike stock exchanges that lets investors buy and sell shares in public companies, there's no comparable option for investors of private companies, even ones that use crowdfunding sites to sell shares.

So how do you sell your shares? That's the question that has legal experts concerned investors might get stuck owning pieces of a company they may no longer want.

In other words, the estimated 6,000 people who expressed interest on StartEngine in buying $22.4 million of Elio Motors might not be able to sell their stake -- or at least anytime soon.

But even if Nancy Pfund could sell shares, she probably won't be buying into Elio Motors or any other auto startups for that matter. The founder and managing partner of DBL Partners says she's tracked several automobile startups in the decade since her venture capital firm made an early investment in Tesla. But she says the large upfront costs and regulatory hurdles doom most Tesla-wannabes, pointing to startups such as Fisker Automotive and BetterPlace, which both flopped when it came to disrupting the auto industry.

"Never say never," said Pfund when asked if she'd invest in another automobile upstart. "But in some ways the time has passed."

Obviously, Elio doesn't see things the same way.

The would-be Elon Musk discounts the challenges his startup still faces, including an obvious one: completing an engine, much less one capable of getting 86 miles per gallon. Four of Elio's first prototypes have borrowed engines from other cars. Elio says its partner, auto engineering company IAV, has built an engine that it will debut in its fifth prototype. When will that be? The company will only say, "Soon."

For now, Elio is riding high.

"I haven't slept this well since 2007," he said. "Obviously, there's a lot of hard work left, but I think the hardest work is behind us."

F-U-N-D-E-D is a regular column looking -- and sometimes laughing -- at what Silicon Valley has backed in the last week.

Updated at 1:43 PM: Adds clarifying comments from company on status of Elio engine.