Understanding six unique risks to investing in Drew Morrison-CityGuru will jump start your Due Diligence as a CityGuru investor.
It is only human nature to forget the Investor’s Mantra: “If you can’t afford to lose it; then don’t risk it” when you are being assured of low risk, high return, quick turnaround opportunity. Even with the Drew Morrison-CityGuru Opportunity, there have been investors before you who forgot this mantra and lost from nominal amounts of their life savings to their homes and childrens’ college funds.
Tread lightly with this investment “opportunity”. Take the time to conduct a thorough Due Diligence that will begin to reveal facts that will create a “Reward to Risk Ratio” in your mind; a ratio weighing the gains you can reasonably expect in return for the losses you might endure if the risks become a reality.
If you will look at it in this prespective, you should get a “feeling” in the pit of your stomach—a feeling that will give you either a “Stop” or “Go” signal. It is often that simple.
Okay, you have heard the Drew Morrison-CityGuru pitch and your interest is piqued. Or, perhaps you are already invested and Drew Morrison’s own enthusiasm is urging you to invest more (See Drew Morrison-CityGuru Asking for More Funding?). As a Prospective or Current investor it is time to begin Due Diligence. For this investment opportunity, your Due Diligence should start with these two prudent assumptions:
- The Drew Morrison-CityGuru venture is very speculative. In fact it is arguably a very high risk venture premised on the six primary risks detailed below. Are you entering into this venture with funds you can—literally—walk away from? If these funds consist of any savings benchmarked for eventual goals; such as the kids’ college fund, then stop and find other funds or walk away from the “opportunity”.
- The Reward side of the Reward to Risk Ratio has never been clearly defined, even by Drew Morrison. To weigh it against known risks makes the Reward factor almost a Risk unto itself. Your ratio can be badly skewed otherwise.
Six Drew Morrison-CityGuru Risks: Can You Afford Them?
The following Risks factors have been identified by previous investors in their Due Diligence and experience. These risks are very specific to the Drew Morrison-CityGuru venture.
Simply put: this is your ability as an investor to pull your money back, particularly if a Life Emergency requires it or you foresee troubled waters for the company you have invested in. For various reasons: there is no liquidity in the Drew Morrsion-CityGuru venture. There is evidence the funds are expended immediately upon receipt and no substantial revenue base to replenish it. You must be a patient investor willing to wait for an incalculable number of years before seeing any return.
RETURN ON INVESTMENT (ROI)
This is what creates the Reward factor of the Reward to Risk Ratio. In an ideal investment, the risks are minimum and can be alleviated while the rewards are so great that even a minimum return will equal or outweigh the combination of the risks factors. As a private company with no viable Exit Strategy, CityGuru offers a vague; seemingly unattainable ROI to its investors. For the CityGuru Investor, the appreciation of value and share price seems the only viable means towards earning a ROI. But, the realities of market drivers of the CityGuru Share Price renders highly unlikely under present conditions. Without a clear Exit Strategy for both founder and investor this venture could be more of a gamble than an investment.
While investors know that it takes time to build and develop a young company, Father Time could be working against this venture. Well into its fifth year of operation, CityGuru can demonstrate little or no growth in Shareholder equity any more now than on Day One. Yet, funding is expended as quickly as it is raised. As gamblers know: the riskier the venture, the more costly will be the Time you spend sitting at the poker table. An economic truth is that time works against money unless it is growing and keeping pace ahead of inflation and the costs of living. As an investor, can you wait another five, ten or fifteen years with no ROI or earnings?
Along with rising costs of living and inflation, Time exacts another cost upon any investment opportunity: better and more profitable opportunities that come and go while the investor’s funds are locked down. While this can be expect, particularly over longer investment durations, but again the ultimate rewards/return should be such that it more than compensates for any previous opportunities bypassed. What if the lost opportunities were more numerous, safer and quicker in return? This is where High Risk investments that produce little or nothing in return (even losses) make Lost Opportunities a painful aspect of investing! A good illustration of this is by comparing the Drew Morrison investment with the Bank’s alternative CD Investment. In this example which investment would have been better for YOU?
Currently, Drew Morrison-CityGuru cannot demonstrate a viable and robust accounting or bookkeeping system. The inherent problems of managing on a daily basis may seem obvious but implications to an investor is enormous. Your investment begins on the day you wired your savings to Drew Morrison. Without a viable accounting system, where your investment money goes, how it is used, what it is used for and the measures of how well that money is performing as investment is lost. Think of attempting a Trans-Atlantic voyage in a sailboat without a compass, GPS or any seafaring tools other than sheer gut feel.
For those who argue that accounting is “over-rated” for a startup company, let’s consider what you lose without the benefit of having an accounting system:
- Without accounting, how can the company track its cashflow; its debts or liabilities?
- Without accounting, there is no system of financial reporting to investors on the fiscal health of the company
- Without accounting there are no means to generate customary financial reports such as Cash Flow Statements, Profit and Loss Statements or a Balance Sheet—the very reports that measure how well the company is really doing. Without these measurements investors don’t know if their investment is on course in the big open endless sea.
- Without accounting it is impossible to develop and follow a budget. Keeping a balance on the personal account of the founder is different from managing the budget on daily business operations.
- Without accounting, CityGuru’s liabilities can quickly get out of control such as: corporate Taxes, fees, accounts payable (and receivables), permits and other debts which erode profitability.
- And most importantly of all: without accounting, Shareholder Equity cannot be accurately recorded.
Regardless of the product or service, when you invest in a company you are really investing in the people who manage and influence that product or service. What happens to a conglomerate’s share price when Wall Street learns of a sudden change in CEO’s?
For our purposes, we consider CityGuru, Inc. and Drew Morrison to be one in the same. CityGuru is for all intent and purposes a “One-Man-Show”. There are particular risks associated with a business that shares the same face as that of its Founder. (link to Due diligence article). We are already seeing how Drew Morrison’s personal legal woes are slowly pulling CityGuru, Inc. into the fracas. As his personal litigation pressures continue to mount so will the toll it will inevitably take on the company in various ways. With seemingly no plan to mitigate the litigation, his legal woes will likely become the legal woes of the CityGuru Shareholder.
There is certainly much more Due Diligence you must perform as a prospective investor as you contemplate investing in this venture. All business ventures have challenges and risks each investor must weigh in his/her own Risk to Reward Ratio. By plugging in these six unique risk factors, you have an excellent starting point to conduct your own Due Diligence on Drew Morrison-CityGuru, Inc.
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