Virtuous Investment Circle Sounds Fishy

Virtuous Investment Circle is a new angel group in Malaysia. According to their mission statement:

The Virtuous Investment Circle (ViC) is an independent non-profit organisation that aims to create a vibrant ecosystem for angel investing in Malaysia.

So, they are supposed to be an independent non-profit organisation. But, later in their FAQ, they stated that:

Charge

There will be a nominal fee of RM500 for each investment proposal to be submitted to the ViC. There will also be a 3% to 5% commission for projects that have successfully received investments from ViC angel investors.

So, it seems like there is a nominal fee of RM500 that they charge for each investment proposal. And, each successful investment that is made throught VIC, there is a 3% to 5% commission. Are they going to use this money for good causes? Or, are they just going to split this money among the people in VIC? So, basically, this means that as long as the organisation is not making any profit(because the money has already splitted among the people in VIC), you can claim that you are running a non-profit organisation?

Before I move on, let’s do a simple math here. VIC charges RM500 for each investment proposal. In US, incubator like Y Combinator gets around 1k application per round, which is about 2k per year. Let’s assume that VIC only gets 10% of this number, which is 200 per year. They are making an awesome amount of RM100k per year just by reading investment proposals by poor entrepreneurs like you and me.

Bullshit Reasons

According to their website, they also said that:

The reason we charge a nominal RM500 fee for each submission is that we want to ensure that the companies who are applying to ViC are really serious about getting funded by angel investors.

Actually, there are many ways to tackle this problem. I have a simple solution here. Since they claim that they are a non-profit organisation, I suggest that they can ask each entrepreneur to attach a RM500 World Vision Malaysia donation receipt with each investment proposal submitted to you.

Commission

Now, let’s talk about the 3% to 5% commission that VIC are going to take from each successful investment. How are they going to spend the money? There is no clear explanation on their website on how they are going to utilize the money. For all the investors who are interested to invest through VIC, please think twice, your investment will get sliced out by VIC before it gets to the hand of your shiny new investment. Btw, if you are interested to invest in local companies, you can contact me. I know many local entrepreneurs who actually want your money without the 3% to 5% cut off.

On their latest PR stunt on Sin Chew, they claimed that about 200 new companies were created by the investment from about 40 ex-googlers. But, you have to know that these ex-googlers don’t charge people to pitch to them. And, VIC do. There is a huge difference here.

Before I end this post, if you are people from VIC reading this post:

Drop the Charge

Seriously, VIC, drop your RM500 pitching fee if you really want to help local entrepreneurs. And, if you do want to charge a 3% to 5% commission, don’t claim that you are a non-profit organisation. One last thing, be transparent with what you have. You sound really fishy to many of us.

Update(Sept 3, 2010, 10.50am): Response from ViC. Not even a linkback?

Photo from |[ sykez ]|.