No capital, no cushion: Startups struggle outside Jakarta

In Raena’s early days circa 2019, founder Sreejita Deb partnered with social media influencers to incubate new beauty brands. But traction came from an unexpected group: resellers from Indonesia’s Tier 2 and 3 cities.

Hailing from places like East Kalimantan or Central Sulawesi, these resellers bulk ordered Raena’s products, selling them on Shopee or direct to local customers. One year later, the startup pivoted to become a B2B distribution platform.

Image credit: Timmy Loen

The pitch was simple. Beauty resellers – especially outside Java island – don’t have access to Jakarta-based brands, while those brands find expanding beyond the capital difficult.

Raena would bridge that gap, and for a while, the model worked.

“From 2020 to 2022, our revenue tripled each year. We thought we were onto something good,” Deb, a Google and Amazon alum, tells Tech in Asia. In 2022, the company secured US$10 million in series A funding.

By February 2025, however, Raena had shut down.

As Indonesia’s startups raised funds at massive valuations, one number remained in investors’ minds: a total addressable market of 270 million people.

But only a third lived in Greater Jakarta. As the country’s most populous – and affluent – city became saturated, Indonesia’s Tier 2 and 3 markets were touted as the next frontier for tech companies. 

That hypothesis remains unproven, however. After all, Raena isn’t alone: Other startups targeting these smaller markets, such as Ula and RateS, have also wound down or ceased operations.

These instances have raised a difficult question: Can Indonesia’s startups really thrive beyond Jakarta?

The cheaper, the better

Roughly 70% of Raena’s orders came from outside Java as of 2023, but by mid-2024, cracks began to show. Resellers were losing customers, and for the first time in the company’s history, monthly revenue started to decline.

Part of the reason may have been the economic slowdown. Entire Indonesian towns can depend on a single factory, and as layoffs permeated, customers began cutting their spending. 

Some customers also skipped the resellers entirely, buying products directly from the brands’ Shopee storefronts.

Monetizing the wrong thing

What works? Essentials – and B2B