Khazanah Nasional’s investment in FashionValet was meant to be a bold move into Malaysia’s fashion-tech space. Instead, it turned into a cautionary tale. Co-founded by influencer Datin Vivy Yusof and her husband Datuk Fadzarudin Shah Anuar, FashionValet began as a promising e-commerce marketplace and evolved into a homegrown fashion empire, built around Vivy’s personal lifestyle brand. To many, FashionValet wasn’t just a business; it was a symbol of modern Muslimah elegance and aspirational entrepreneurship.
But the company’s strength, its close association with its founder’s identity, proved to be its greatest vulnerability. As Khazanah’s Managing Director Datuk Amirul Feisal Wan Zahir told the Public Accounts Committee (PAC), the business was “highly susceptible to volatile public sentiment and reputational shocks.” When controversies emerged, they affected more than just Vivy, they undermined the company itself.
The Numbers Behind the Fall
In March 2018, Khazanah invested US$7 million (RM27 million) into FashionValet, despite the platform already logging six straight years of losses since 2012. The justification was rooted in optimism. Annual revenue was reportedly growing at over 100%, and global investors such as 500 Startups and Japan’s Zozotown had already joined in. Khazanah viewed it as a typical high-growth startup scenario, where early losses are expected in exchange for long-term market share.
By 2022, however, FashionValet’s losses had expanded to RM127 million. Khazanah and Permodalan Nasional Bhd (PNB), which had invested a combined total of RM47 million, exited in late 2023 for just RM3.1 million, resulting in a devastating RM43.9 million write-off.
What Went Wrong?
FashionValet’s collapse cannot be attributed to a single cause. It was the result of strategic errors, external shocks, and internal weaknesses, all unfolding at once.
- Costly expansion: The company implemented an omnichannel strategy by opening physical stores in high-end malls. When the Covid-19 pandemic hit, those stores were forced to close, yet rental payments continued, draining its resources.
- Shift in market behaviour: After the pandemic, more brands began selling directly to consumers through their own websites and social media platforms. FashionValet’s marketplace model, once relevant, struggled to retain its place in the new digital retail landscape.
- Public backlash: Vivy’s strong online presence, once a key growth driver, started to attract criticism and controversy. As public sentiment soured, it damaged the brand’s credibility and eroded customer loyalty.
- Governance lapses: In December 2024, both founders were charged with criminal breach of trust (CBT) involving RM8 million, allegedly transferred from FashionValet’s account to another company without board approval. They have denied the charges and are currently claiming trial.
Khazanah Defends VC Strategy
Despite the setback, Khazanah continues to support its broader venture capital (VC) strategy. Managing Director Datuk Amirul Feisal Wan Zahir stated that early-stage losses are common in the VC space, particularly for companies pursuing scale over short-term profit; a pattern also seen in large regional players like Grab and Shopee. He emphasised that full due diligence was conducted, with advice from external consultants including KPMG and Ernst & Young.
In his remarks to the Public Accounts Committee (PAC), Amirul Feisal further explained that early-stage investing requires a portfolio approach, spreading investments across a range of startups to mitigate overall risk. In such a model, only one or two may succeed, but those few can deliver substantial returns that compensate for the losses in the rest of the portfolio.
Datuk Hisham Hamdan, Khazanah’s Chief Investment Officer, supported this view, noting that while FashionValet was indeed a loss, Khazanah’s global VC portfolio had generated RM7.5 billion in profit. He stressed that FashionValet was just one investment among many under a long-term strategy focused on innovation, economic diversification, and ecosystem-building.
In 2024, Khazanah had RM151 billion invested in about 8,000 companies.
PAC’s Recommendations for Khazanah
The Public Accounts Committee (PAC) called for stronger investment governance and transparency moving forward. Its recommendations include:
- Requiring Khazanah to report investment performance, not just financial results, to the Ministry of Finance in quarterly updates;
- Conducting post-mortem reviews for all major investment losses, and submitting them to the board;
- Strengthening risk planning for unpredictable events such as pandemics or industry shifts;
- Launching public communication efforts to explain the high-risk, high-reward nature of venture capital to the Malaysian public.
These reforms are designed to enhance accountability and ensure public funds are better protected in future high-risk investments. The recommendations came following PAC proceedings involving Khazanah’s investment in FashionValet, after Khazanah and Permodalan Nasional Bhd (PNB) sold their stakes in 2023.
Key Lessons for Founders, VCs, and Policymakers
The downfall of FashionValet sends a strong message: personal branding cannot replace business fundamentals. While Vivy Yusof brought visibility, her influence became a risk factor when reputational issues emerged. Startups built around individuals must establish operational depth and long-term value beyond the personality of their founders.
The case also illustrates the dangers of expanding too fast without financial stability, particularly in high-overhead sectors like retail. Equally important is the need for strong governance, especially when public money is involved. Startups seeking institutional investment must demonstrate not just growth potential but ethical leadership and transparency.
The Fall of FashionValet: A Cautionary Tale
FashionValet’s collapse is more than just a failed investment. It marks a turning point in the conversation around public funding, private ambition, and startup accountability.
For Khazanah, it underlines the importance of diversification, thorough due diligence, and clear internal processes. For entrepreneurs, it is a reminder that charisma must be paired with credibility. And for Malaysia, it highlights the urgent need for better oversight as the country moves to become a regional innovation hub.
The lessons from FashionValet will shape how future government-linked investments are assessed, how public perception is managed, and how startups must evolve to earn not only market share, but also trust.
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