Former Damansara MP Tony Pua said the current wave of criticism aimed at state investment funds Khazanah Nasional and Permodalan Nasional Bhd over their failed investment in Fashion Valet could lead to a culture of risk aversion.
Both funds have been taken to task over their RM44 million investment losses in the online fashion retailer.
Fashion Valet had already incurred five consecutive years of losses when Khazanah and PNB invested RM27 million and RM20 million, respectively, in the company in 2018.
That was two months before Pakatan Harapan took power.
“Malaysia will be the loser because our young entrepreneurs will be unable to raise the necessary funds to grow their big ideas and compete regionally or globally,” Pua said in a Facebook post late last night.
“Or, like many before them, (they) will take a hop across the Causeway where there is much better access to capital and liquidity,” he said, referring to how Grab relocated its headquarters to Singapore after Khazanah opted not to invest in the company during its formative stages.
The losses incurred by Khazanah and PNB in Fashion Valet were revealed last week, sparking criticism from political figures and analysts.
However, Pua argued that the criticism has been particularly “misguided and unfair”, primarily focusing on the percentage of losses while ignoring the broader context of venture capital.
Pua, who was also political secretary to the finance minister from 2018 to 2020, said the venture capital landscape is inherently risky, with more failures than successes.
“(In) the venture capital game (one) is to expect that out of 10 investments, three or four will be disasters – like Fashion Valet, three or four will just about cover cost, while two or three make spectacular returns,” he said.
“If we want to be in this game of creating regional or even global unicorns, then we must be prepared for disaster.”
Pua said successful outcomes often arise from embracing the potential for failure, citing the example of Grab, which was also deemed a high-risk investment in its early days.