Clifton McMillan Jr. is all about diversification—he’s invested in 17 startups since joining Republic in March of 2017. A resident of Alabama, Clifton participates in several 5Ks each year to support charities and nonprofits that raise money to treat diseases. He’s also a big fan of superhero movies.
Prior to Title III of the JOBS act passing, Clifton wanted to invest in early-stage stage startups, but as an unaccredited investor, he just couldn’t join in. He found this extremely frustrating.
As a Legal Assistant with a law degree, McMillan has no formal finance background, so he’s taught himself the ropes of investing, and continues to read as much as he can on the subject to increase his expertise.
We talked with Clifton to learn a bit more about what drew him to startup world, what he looks for before investing in a startup, and why he prefers to invest on Republic.
What got you interested in startup investing?
With this whole thing with investing, I'm not formally trained or anything—I'm more or less self-taught. I was reading about how you could invest in companies at the ground floor, and I think it was 2015 at the time, so you had to be accredited investor, and I was not an accredited investor. Then Title III of the JOBS Act passed, and I realized, “Hey, I can actually participate in this now.”
Since you had your eye on early investing for a while, did the passage of Title III come as a complete surprise? Or did you think something like that might occur?
The funny part about a lot of these proposals, especially in the financial sector, is that a lot of people propose things in Congress. There's ton of bills that go to Congress every year that never even make it out of committee. So, I was definitely surprised, but I was pleasantly surprised.
When it passed, for me, it was like the light bulb went off. I thought “Hey, I can actually be a part of maybe the next Facebook or something.” A few years ago, if Zuckerberg had come to me and said, “Hey, do you want to invest in Facebook?” I wouldn’t have been able to because I wasn't an accredited investor. But now, there are these new companies coming out almost every week saying, “Hey, we have this great product is great service. This is what we've done so far. We just need a little bit of money to kind of help take us to the next stage. Would you be interested?” It's exciting be a part of something from the beginning and to watch it grow.
A few years ago, if Zuckerberg had come to me and said, “Hey, do you want to invest in Facebook?” I wouldn’t have been able to because I wasn't an accredited investor.
And the thing that I also like is that they’re not asking for an arm and a leg to participate. It can be $25, $50, or $100. I think about some of the events I've gone to on the weekends, and I spend that much on entertainment. So, why not put $25, $50, $100 into something that is going to build up and grow? And really, to be honest, doing so also helps America, because every small every startup that really succeeds, that brings jobs and opportunities for a lot of people who wouldn't have received those opportunities.
It's kind of like having a garden, where you plant your seeds. You might plant some watermelon, you might plant some cucumbers, you might plant some green peppers. And then you just water them and fertilize them and watch them grow. Everything doesn't grow quite as you expected, but the process can be beautiful anyway.
What are some of the factors that you weigh when choosing to invest in a particular startup?
I think about the social impact, and I think about the diversity aspect, especially with women founders, Latinos, immigrants, and African Americans, different groups that you don’t usually see as the face of startups.
But at the end of the day, you have to have a good product for me. I don't care if you worked on Wall Street for 30 years, or if you went to Harvard—you could have had all these experiences, but if you don't have a product that really is compelling, or services that are really compelling, then I won’t invest. It doesn’t have to be a “Hey, this is going to change the world," product, but maybe it'll help people have more fun, spend more time with their families, or help them save money.
Do you talk about your startup investing with your friends and family? Do you ever say “Hey, jump on this bandwagon?”
I'm kind of an outlier right now. I think if my friends saw me with a wad of cash, they'd be a little bit more interested. My parents, they're kind of learning from me. Most of my friends are a little curious. But you know how when you're hanging out with your friends by the pool, you wait to see who's going to go in first to feel how cold the water is? That's kind of who I am right now.
What’s a startup that you’ve invested in the past that you were really excited about, and why?
One that I got really excited about was Jetpack, where they were trying to streamline the process of being able to get different things to college students, because with a lot of the big delivery companies, it's not worth their time and expense to try to drive their vehicles on the campus, then park—if they could find parking—and find the dorm rooms. It made more sense to have college students working with other college students to get deliveries accomplished.
Is there a specific tech space that you follow or one that you're more interested in investing in?
It’s a lot of different things. For me, I realize that you really don't know what the next big thing is going to be, and sometimes people will be looking in one direction. They may be excited about Tesla, for instance, and I have nothing against Tesla, but there are other things, maybe smaller batteries or something like that, that might be out there.
There are opportunities that are really exciting, but you have to take a second look at them and be patient.
There are opportunities that are really exciting, but you have to take a second look at them and be patient. Because these companies, some of them might get bought out in a year, some of them may take 10 years, and some of them may just close shop. You just never know.
Right now, everyone’s on the hot rage about cryptocurrencies and Bitcoin. I don't really deal with it much. I’m not going to tell someone not to invest in it, but I’ll say the same thing I say to them as I would to anyone who does equity crowdfunding—do your research, do your research, do your research. Don't put in anything that you can't afford to lose.
Are there any particular outlets or resources you use to learn more about the market and investing?
Some of them include Bloomberg, the magazine as well as the actual TV channel; Forbes, I don't think you can really be the best investor you need to be if you're not looking at Forbes occasionally; The Economist; The Wall Street Journal; Black Enterprise; Foreign Affairs Today, and NPR. Those are some of my go-to’s.
There are other companies that allow you to invest in startups. What specifically drew you to Republic?
I actually stumbled across Republic reading about an article on the Zika virus. One of the companies was making some kind of clothing that helped protect against the Zika virus. I wasn't able to invest in that one, but it made me keep my eye on Republic and see what else they were working with. And I've been pretty pleased so far.
One of the things I like about Republic it is that it's active. I've dealt with some other crowdfunding portals with varying degrees of success and engagement, but what I like about Republic is you're not just staring at a sterile screen that says "Hey we have x, y, and z, and please buy it”.
What I like about Republic is you're not just staring at a sterile screen that says, 'Hey we have x, y, and z, and please buy it.
There's video, there are exciting graphics, there's actually a little humor, and there are also message boards where you can talk to other investors, so you don't feel like your just floating in a lifeboat in the middle of the ocean with sharks.
I also like that you receive emails regularly saying, "Hey, this is what Republic's doing, this is who we're partnering with.” Then there are the founder stories—I think those are pretty cool, when you interview the founders and pick their brains a little. Those stories are very valuable, and it's really fascinating to learn that they're trying to figure it out, just like you. I think many times when we hear about people who have startups, we think, “Oh, they’re so much more brilliant I am. They’ve got it all figured out.” So it's great to hear them say, “Hey, I had fears. I wasn't sure, and I made mistakes, too. This is what I've learned along the way." That's invaluable.