KUALA LUMPUR, Aug 4 — When FashionValet, the homegrown online retailer and e-commerce platform that once boasted a multi-million ringgit valuation said it was shutting down, the announcement generated unusual public interest.

"As they all say, all good things must come to an end... and be replaced with something better. With that, we are thrilled to share with you — a brand new shopping experience,” said the platform in its last days.

Observers have since questioned how a startup that was posting losses in the millions convinced two of the country’s largest state investment funds — Permodalan Nasional Berhad (PNB) and Khazanah Nasional Berhad — to inject money into what seemed like a failing enterprise.

Malay Mail attempts to explain some of the key questions around the issue:

Who are the people behind FashionValet?

FashionValet Sdn Bhd was formed in 2010 by couple Datin Vivy Sofinas Yusof and Datuk Fadzarudin Shah Anuar, who reportedly met each other while studying at top UK universities, The London School of Economics and Imperial College respectively.

The brand banked on Vivy’s popularity as an influencer and blogger, with her becoming the face of the group and its chief creative officer, while engineering graduate Fadza served as chief executive officer (CEO).

Tatler Malaysia quoted the couple as saying that the company was registered "the next day” after they had an epiphany.

"After going from bumper-to-bumper traffic, an irritated Fadza blurted out, ‘Why can’t everything be in one place?’ It was as if a lightbulb switched on in our heads,” Vivy was quoted as saying in the 2017 interview.

Public attention about FashionValet’s closure is probably due to the couple’s social media presence. Vivy has 1.8 million followers on Instagram at the time of writing.

What is FashionValet?

Think Lazada, Shopee or Zalora. FashionValet began as an online retailer that eyed a niche market comprising local fashion designers and clothes makers.

Most of the products sold on the platform catered to (but was not limited to) the chic, modern Muslim woman, defined by what the company called "premium modest fashion.”

That same ethos shaped dUCk and Lilit, two in-house brands under FashionValet that carved out a huge Muslim-based customer base by selling fashionable, and sometimes, limited-edition headscarves or hijab, "Shariah-based” beauty products, "modest” fashion and accessories, home products, and stationery.

Since FashionValet decided to cease operations, the group has focused its efforts on these two brands.

Where can one find FV outlets?

Online, FashionValet served a predominantly Malaysian market, with marketing head Vee Dee Tan quoted as saying its clientele also came from "Brunei, Singapore, Australia and a bit of the UK and the Middle East”.

At its peak, FashionValet opened five brick-and-mortar outlets including in upscale shopping malls such as Pavilion Kuala Lumpur and Bangsar Village 2, and also another in IOI City Mall Putrajaya.

It also opened an outlet on Orchard Road in Singapore.

When did its financial troubles begin?

Based on its latest available public financial statement ending December 31, 2020, the company’s retained earnings were -RM83,442,646.

Negative retained earnings typically suggest poor financial health and indicate the company has been incurring losses for an extended period.

For the financial year 2019 to 2020, it posted a pre-tax loss of close to RM15 million.

Malay Mail reached out to the company’s public relations agency Edelman, but had yet to receive a response at the time of writing.

Why is this an issue?

While FashionValet is a private company, some of its investors are not.

PNB and Khazanah Nasional, both state-investment funds, were reported to have invested millions of ringgit back in late 2018 and early 2019 through its Series C rounds of investments, despite journalists then asking about the group’s losses.

While the amount was not disclosed then, Vulcan Post reported that FashionValet received around US$12.06 million (about RM53 million) during Series C, with its total funding over the years at over US$19.3 million.

"I am so excited to do more for the Malaysian fashion industry; it’s something I am very passionate about. FashionValet is always on the lookout to help grow more local brands to compete in the international arena, and I am confident our Malaysian brands have the potential to do just that,” Vivy was quoted as saying by DigitalNewsAsia then.

Khazanah and PNB did not respond to Malay Mail’s requests for comment.

DigitalNewsAsia reported that other investors in FashionValet included MyEG, Elixir Capital based in Silicon Valley and Zozotown, Japan’s leading online fashion mall.

How has this affected its brands and vendors?

There were allegations that FashionValet heavily promoted its own two brands at the expense of helping out other local vendors that used its platform and physical stores to sell their products, even as it marketed its business model around promoting local entrepreneurs.

In a statement reportedly sent to news outlet SAYS, Vivy was quoted as saying that the shift of focus to dUCk and Lilit was made in 2019, at the same time that Khazanah and PNB injected funds into FashionValet.

The plan was then accelerated by the Covid-19 pandemic that saw brands selling directly to customers rather than via retailers.

"We saw a trend of businesses expanding their own channels to sell directly to consumers, which is great for the booming local fashion industry,” she reportedly said.

"Even industry leaders such as Nike were vocal about reducing their reliance on retailers.”

What remains of hundreds of these brands and designers after FashionValet’s closure is unclear.