Reza Fahmi RazaliI has been in the IT industry from the young age of 17, sweeping up international IT awards such as the APICTA and APMITTA with his maiden project, terato.com, a portal for teens and car modifications with over 2 million hits and 50,000 members. Reza is currently CEO of Terato Tech which builds app such as Undies and AiYo Magazine. Reza also is serving as TeAM council for the first time.

We have been receiving a number of feedback about our charging of a nominal RM500 application fee.

First of all, we would like to thank some of you for the feedback. We appreciate when people point out issues that are bothering them because it allows us to have an open discussion to address them. We immensely value transparency, honesty and openness. It enables us to know what we must improve on.

That being said, we must apologise for the appearance of not being very clear at this point about our organisation model on our website (i.e. why we’re charging an application fee, where does this money go to and other related issues).
Since we just started our website, we are still in the midst of heavily improving it, which means that some pieces of information may still be missing at this point. (If we did really attempt to cover all possible issues from the get-go, the website will never go live, ever.)

We hope you will be patient with us while we’re working to make more information available on our website.

In setting up ViC, we have considered many possible organisation models from researching, interviewing and talking to many angels themselves and angel networks in the industry (worldwide). After careful deliberation of the existing state of our angel investing ecosystem in Malaysia and with support from local angel investors, we have decided that our current model is the most suitable path for now.

However, we are fully aware that our model may need to change in future depending on how the local ecosystem evolves and the feedback that we get from both local angel investors and entrepreneurs. We will be prepared for that when the time comes. But for now, we are confident that the decision we made is the best at this point which will serve our mission of creating a more vibrant ecosystem for angel investing in Malaysia.

Again, thank you to some of you for your feedback. We are currently preparing the information which will address the issues some of you have brought up more clearly and transparently. It will be updated on our website as soon as possible.

Stay tuned!

As any startup organization, they have refine their offering to the community and we will be monitoring the situation more.

The Virtuous Investment Circle (ViC) was set up on 4th August as one of Malaysia pioneering Angel investment group. According to their site, “ViC is a non-profit organisation passionate about creating a vibrant ecosystem for angel investing in Malaysia.”

An article in Lowyat Forum

The Virtuous Investment Circle is an independent not-for-profit angel investment group that aims to provide innovative start-ups with enough funds and mentorship to see them through the early stages of inception. Offering deals worth between RM50,000 and RM2.5million, VIC also has a solid list of members that poses years of industry experience in various fields of business.

ViC declares a four-fold goal which hope to help the angel and startup eco system in Malaysia:
1) To provide a platform for innovative start-ups to raise funds and for investors to invest.
2) To encourage and strengthen the local angel community.
3) To generate quality deal flows through rigorous screening process.
4) To provide guidance and mentoring for new business angels and entrepreneurs.

This is an awesome initiative to bring people to invest startup locally.

However what happened yesterday shocked the entrepreneurial community.
In its application process, applicatants are required to summit their application in 4 step.

Step 1: Investment Proposal

Step 2: Nominal Application Fee
Pay the nominal RM500 application fee. We charge a nominal RM500 fee for each application/submission – to ensure that the companies who apply are serious about applying for angel funding as our angel investors are serious about funding companies.

Note: Paying the application fee alone will not guarantee a pitching session with angel investors.

Step 3: Email Proposal and Payment Proof

Wait WHAT? Go back to Step 2. A bunch of angel investors asking for poor founders of startups to pay to meet them and not even guaranteeing a pitching session with their currently 15 nameless angel investor?

This of course caused the entrepreneurs on twitters to raise the alarm.

As of today, ViC responded over twitter that the application fee is used to cover cost.

Teng Siong Ong wrote in his blog:

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.

ViC also responded over their site to ignore Step 2 (paying RM500) for now until decide on a further action.

We’ve been trying to get hold of people from ViC and nobody seem to be picking up their phone. We will be updating here with more details.

Update 12pm 3rd Sept 2010:

We got hold of Bob Chua, one of the founder of Virtuous Investment Circle (ViC) and he said that this angel network is modeled after what most of the angel network ie Keiretsu Forum and it is not too dissimilar from what the other network in the region and even in the States have to offer. The idea behind the RM 500 application fee is to filter out people who are not too serious about getting funded and the price very little compared to other angel groups. He adds, if you are really serious about your business and confident about your startup, just summit and ignore Rm 500 application fee.