KUALA LUMPUR (Aug 21): Khazanah Nasional Bhd flagged a critical lesson from its failed investment in the country first fashion e-commerce platform FashionValet Sdn Bhd, warning of the high risks associated with “icon-driven” business models — where a company’s value is overly tied to the personal brand and public image of its founders.

FashionValet, co-founded by social media influencer Datin Vivy Yusof and her husband Datuk Fadzarudin Shah Anuar, began in 2010 as a marketplace for third-party fashion products before pivoting into its own modest wear labels, dUCk and Lilit.

The brand's identity was inseparable from Vivy’s lifestyle persona, which Khazanah managing director Datuk Amirul Feisal Wan Zahir said made the company “highly vulnerable to volatile public sentiment and reputational shocks, including cancel culture”.

He was quoted in the Public Accounts Committee (PAC) report after it reviewed how Khazanah manages and oversees its local investments, especially due to FashionValet’s poor performance.

Khazanah invested US$7 million (RM27 million) in March 2018, even though FashionValet had been loss-making even for six consecutive years since 2012. Amirul Feisal argued that "early-stage losses are common among growth-stage companies chasing scale", pointing out that FashionValet had already attracted global venture backers such as Silicon Valley’s 500 Startups and Japan’s Zozotown.

“In terms of revenue, FashionValet’s growth profile at that time was almost about 100% or over 100% every year. That’s the growth rate. For example, if we look at Grab or Shopee or you know, all these companies are still making losses even now,” Amirul Feisal said during proceedings in February 2025.

He stressed that due diligence was performed, supported by external advisers KPMG and Ernst & Young. “In this industry, losses during rapid growth are not unusual. The real question is whether growth translates into durable market share and long-term value,” he said, comparing the trajectory to regional giants like Grab and Shopee, which remain unprofitable but still command investor confidence.

Vivy, leveraging her strong social media presence, helped propel FashionValet into the public spotlight. Her public persona meant that controversies or shifts in public sentiment could disproportionately affect the business. Vivy and her husband have since stepped away and relinquished their positions from the company after the company made the headlines following public uproar. 

By 2020, FashionValet faced financial problems due to its costly strategy of opening physical stores in expensive malls. The Covid-19 pandemic made things worse by disrupting store operations, supply chains and cash flow.

Consumer behaviour shifted rapidly, with brands opting to sell directly via their own websites and social media platforms, leaving FashionValet struggling to maintain relevance.

At the same time, FashionValet's losses ballooned, with accumulated losses hitting RM127 million by 2022. Khazanah finally exited in January 2024, writing off RM24 million of the RM27 million it had invested.

“The failure was not due to one factor alone, but a combination of risky strategy, pandemic shock and structural shifts in consumer behaviour,” Amirul Feisal told the PAC. He went on to defend its broader venture capital (VC) strategy, noting that venture investing is inherently high-risk.

“In a typical VC portfolio, only one or two out of 10 investments succeed — but those few can deliver outsized returns,” Amirul Feisal said. Khazanah chief investment officer Datuk Hisham Hamdan said globally, its investment in several platforms brought in RM7.5 billion profit.

He explained that when investing in early-stage platform businesses (like tech start-ups or e-commerce companies), it is risky to put all your money into just one company. These types of companies often have yet to prove their business models and tend to lose money in the early years, which is normal in VC.

So, instead, Khazanah believes in a portfolio approach — investing in several companies at once (eg 10 or more). That way, even if most lose money, one or two successes can bring in huge returns and offset the losses.

This lesson emphasises diversification as a safer, more effective way to manage high-risk investments in startups.

Khazanah had RM151 billion invested in about 8,000 companies in 2024.

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PAC says Khazanah should report investment performance, not just finances, to MOF after FashionValet failure