FashionValet's Deserved Overreaction

irfanismail,•startupinvestment
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At the start of Nov 2024, FashionValet was on spotlight due to Khazanah & PNB's decision to sell off their stakes from the company, citing losses from their investment. [1] (opens in a new tab)

What went wrong

Malaysians being so quick to judge, accused many nasty things about the entrepreneurs behind FashionValet and the decision makers from Khazanah & PNB. To the point where the 2nd Minister from MOF, YB Amer Hamzah had to defend the investment decision made back in 2018 (Dude was not in office then).

This is truly a PR disaster blown out of proportion, and unfortunately, everyone involved (FV, Khazanah, PNB) contribute to making the situation worse by making statements, attempting to escape public criticism, but unknowingly highlighted their own flaws.

The cherry on the cake is the SPRM. When the SPRM is involved, FV's public perception goes down the toilet immediately. I believe SPRM should not be handling this case. Selloffs are just part and parcel in the investment world, and should not trigger an investigation that can destroy a business like; account freezing etc.

How do you vindicate a business if later proven innocent? The damage has been done. Who will trust a business that has gone through an SPRM investigation. Remember, it takes time to conclude an investigation and by the time it concludes, the public will only remember what happened, but almost never the outcome.

Undeniably, FV's use of the funds is incredibly sketchy. Using to purchase another self-owned business (30Maple) screams 'legal-theft'. However, it is in their right as business owners to make that decision, so no legal issue here. Vivy and her husband's display of lavish lifestyle on social media does not help their case either. Who's going to believe your display of success when the truth about the business is exposed? Memang padan muka.

What should have happen

Khazanah & PNB should:

  1. Take a leading role by reminding the public that investments never guarantees profit AND cutting loss is an investment strategy.

  2. Highlight that their investments in startup companies is INSIGNIFICANT compared to their overall funds, that have raked multiple folds in return. (✅ They did this!)

  3. Be brave in saying that crying over pennies is a fool's errand. Sure, FV's investment knocks -RM 42M. But their overall performance brings them nett +RM 6B.

The idea is to tell the public to take a step back and look at the bigger picture.

FashionValet should:

  1. Take the L. This is an outcome that many startups had to take, and they should know better when to call it quits.

Future for the startup scene

I strongly believe Malaysian VCs should continue to invest in local SMEs & startups. SMEs & startups drive the economy of the nation, and we should not let this incident deter VCs from giving funding opportunities to deserved entrepreneurs. There are always opportunity to be made for local business to return 100x back to the nation.

One uplifting news I found is, Khazanah responded by doubling down the effort to invest in startups with the introduction of Jelawang Capital (opens in a new tab). Because, if we dont invest on our own talent, who else will.

© Irfan Ismail.RSS