UPDATE: 17th Nov 2024
Recent revelations have thrust FashionValet, a once-celebrated e-commerce platform, into the spotlight for all the wrong reasons. Investigations by the Malaysian Anti-Corruption Commission (MACC) revealed that Khazanah Nasional and Permodalan Nasional Bhd (PNB) incurred losses of RM43.9 million from their 2018 investment in the company. Originally investing RM47 million to support Malaysia's digital retail sector, both organizations exited their stake in October 2024, selling it for just RM3.1 million to NXBT Partners.
This development has triggered widespread public outrage, leading Prime Minister Anwar Ibrahim to direct Khazanah to conduct an internal audit. The investigation aims to uncover potential mismanagement of public funds. Meanwhile, the company’s founders, Datin Vivy Yusof and Datuk Fadzaruddin Shah Anuar, have stepped down to focus on FashionValet's turnaround efforts, acknowledging past mistakes tied to overambitious expansion plans. Raids conducted at several locations, including FashionValet's offices, have intensified scrutiny around the company.
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FashionValet, founded in 2010 by Vivy Yusof and her husband Fadza Anuar, was a pioneer in Malaysia’s online fashion scene. The company began as a curated marketplace for local designers, offering them a platform to showcase and sell their products. Over time, it evolved from a small startup to a highly recognized brand, transitioning into a direct-to-consumer (D2C) model and expanding both online and through physical stores. FashionValet's growth coincided with Malaysia’s increasing digital adoption, and it quickly became a go-to platform for fashion lovers looking for trendy, modest wear.
The Rise of FashionValet and Vivy Yusof’s Influence
Vivy Yusof, an influencer with millions of followers, became a public face for the brand, using her social media presence to elevate FashionValet’s image. Known for her luxurious lifestyle and social media savvy, Yusof quickly rose to fame, securing celebrity endorsements and partnerships that helped FashionValet gain widespread attention. The company also benefited from strategic investments, with high-profile Malaysian institutional investors, such as Khazanah Nasional and Permodalan Nasional Berhad, injecting funds into the business.
FashionValet’s success was linked closely with Vivy Yusof’s personal brand. Her influence as a social media personality helped drive engagement and brand awareness, propelling FashionValet to the forefront of the Malaysian fashion industry. This prominence gave local brands a springboard to reach a larger audience, enabling many to flourish alongside FashionValet’s growth.
A Strategic Pivot and the Closure of FashionValet
Despite its growth, FashionValet announced its closure in 2022. The decision came as a surprise to many, especially given its significant position in the local fashion industry. According to Vivy Yusof, the closure was part of a strategic shift made back in 2019 to focus on the company’s two more successful brands, dUCK and LILIT., which catered specifically to the modest fashion market. These brands had been performing well and represented a global opportunity to tap into the expanding modest fashion industry. The global market for modest fashion was experiencing rapid growth, and both dUCK and LILIT. were poised to take advantage of this trend.
Yusof explained that the pandemic accelerated the company’s decision to close the FashionValet platform. The COVID-19 outbreak severely impacted local brands, diminishing their ability to supply products to the marketplace. With fewer suppliers and shrinking inventories, FashionValet struggled to maintain the breadth of offerings that had once defined its platform. In contrast, dUCK and LILIT. continued to perform well, allowing the company to pivot toward these house brands.
Despite the closure, FashionValet’s legacy remained as an integral player in Malaysia’s fashion ecosystem, helping to elevate local brands over a decade of operation. However, as the company focused its efforts on dUCK and LILIT., questions arose about its handling of finances, particularly regarding investments from Malaysian sovereign wealth funds.
Accusations of Nepotism and Misuse of Public Funds
As FashionValet closed its doors, a wave of public backlash followed, particularly on social media. Allegations surfaced accusing Vivy Yusof of misappropriating funds from FashionValet’s Series C funding round, which was led by government-linked investment firms Khazanah Nasional and Permodalan Nasional Berhad. The accusations claimed that Yusof, who was seen living a lavish lifestyle on social media, was not handling the funds transparently. Some netizens questioned how the company could be closing down while still receiving public funds and continuing expensive activities like renovating stores and expanding its offline retail presence.
The uproar was amplified by social media discussions, with netizens expressing concern over the use of taxpayer money to support what some described as a failing enterprise. They argued that public funds should have been used to support more deserving businesses, particularly startups with innovative ideas rather than established brands linked to influential figures like Yusof. The controversy escalated to the point where calls for a legal investigation into the company’s financial dealings were made.
One of the core criticisms centered around the perception of nepotism and favoritism. Detractors pointed out that government-linked companies had taken a financial risk by investing in a business perceived as being tightly tied to its founder’s personal brand, rather than its underlying financial health. These allegations were bolstered by claims that despite receiving significant capital, FashionValet had been making losses, which raised questions about its financial management and the decisions made by its board of directors.
The social media backlash against Yusof and FashionValet was substantial, with a peak of over 1,200 mentions in late July 2022, according to social media tracking tools【61†source】. Key terms associated with the scandal included "founder flex travel" and "kertas siasatan" (investigation papers). While some users remained neutral, a significant portion expressed negative sentiment, urging greater transparency from both the company and its investors.
Yusof’s Response and Defense
In response to the accusations, Vivy Yusof defended the company’s decision-making process, stating that all major decisions were made with board approval and investor oversight. She clarified that the investment funds from Khazanah Nasional and Permodalan Nasional were not limited to the FashionValet platform but were invested in the group’s broader operations, which included dUCK and LILIT. Yusof emphasized that since the Series C funding round, the company had seen improvements in its profit margins and growth, particularly in its offline retail presence.
Yusof further explained that the pivot towards dUCK and LILIT. was part of a long-term strategy that had been developed in consultation with the company’s investors. She highlighted that the business had managed to grow despite the challenges of the COVID-19 pandemic, which had disrupted many businesses across industries. In her view, the controversy was unwarranted, as the company had acted transparently and in the best interests of its stakeholders.
The Broader Implications
The closure of FashionValet and the ensuing scandal raised larger questions about government investment in startups and the transparency of public funds. Critics argued that the decision to invest in FashionValet reflected poor judgment on the part of Khazanah Nasional and Permodalan Nasional, as the funds were perceived to have been used inefficiently. Additionally, the controversy highlighted the broader issue of favoritism in Malaysia’s business landscape, where high-profile individuals with government connections are seen as having an unfair advantage.
As of now, FashionValet’s legacy continues to be debated. While the platform helped local fashion brands gain visibility and expanded the modest fashion scene, the accusations surrounding its closure have cast a shadow over its achievements. For Vivy Yusof, the controversy is a challenge to her public image, one that will likely follow her as she continues to build dUCK and LILIT into global brands.
UPDATE: Khazanah Nasional clarified its RM27 million investment in FashionValet (FV), addressing misconceptions and recent media coverage. As a private market investor, Khazanah regularly invests and divests from assets based on its portfolio strategy. However, the sovereign wealth fund did not reveal the percentage of FV it purchased or whether it had divested its stake in the fashion e-commerce platform.
Khazanah reiterated its support for local Malaysian founders and startups, including FV, through investments like MAVCAP and Penjana Kapital, aimed at fostering the national startup ecosystem. This statement comes amid reports from Asia Tech Review that NXBT Partners had acquired a significant stake in FV, allegedly at a price lower than what Khazanah initially paid.
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