It is true that Covid-19 has caused unprecedented disruption in certain industries. Every day you hear discussions about startup layoffs, investors holding back, whether the government should save certain startups etc. 

Inevitably, the crisis put the final nail to the coffin of companies which were already zombies, and killed off some startups which were weaker, did not have financial discipline and sometimes were just unlucky. 

However, it is also important to note that startups fail all the time, even the most well funded ones do. The mere coincidence in timing of corporate failures and external factors does not warrant jumping to premature conclusions.

Prior to these, the unique challenges of Southeast Asia as a region, which we investigate frequently, have probably been (at least partially) responsible for a myriad of tragedies and successes alike. 

In many ways, SEA is the sophisticated battleground on which the wheat is separated from the chaff. Now let’s have a look at some of these SEA tragedies, which collectively burned at least US$ 1.2B – somewhat similar to the latest round GoJek raised: 


In our analysis we found the most common reasons, and which companies would fall victims of such reasons (or combination of reasons): 

  1. Too much ahead of their time (when infrastructure, talent and consumer readiness were insufficient): Fastacash, Rakuten, Reebonz, Ensogo

2. Launching or scaling too fast: Rakuten, RupiahPlus, Honestbee

3. Failure to localize: Rakuten, Uber, Easy Taxi, Elevenia 

4. Fundamentally flawed business model: Groupon, HonestBee, Fastacash, Rocket Uncle

5. Competition (and stiff or not is a relative word, it really depends on whether you have been through the tech wars in China): Uber, Easy Taxi, Rakuten, Ensogo

6. Regulatory hurdles: RupiahPlus, Easy Taxi

Let’s also explore a few examples in detail.

Reebonz’s failure

Reebonz boasted a promising value proposition, introducing trust and confidence to C2C transactions.

Being an early entrant to the e-commerce scene in 2009 (3 years before Lazada was founded) with a solid understanding of the purchasing experience in luxury, they were well positioned to ride the wave of the burgeoning upper middle class in the region.

Their expansion was highly ambitious to say the least, diversifying into 9 markets, with half a million paying customers. 

In the process however, debt continued to pile up with profits inverting from 54M in 2017 to a 36M loss in 2018 as per SEC filings. 

Rakuten’s failure in Southeast Asia

Rakuten is in many ways a textbook example of a highly competitive incumbent poised to establish a solid footprint in the new markets it expands into.

However the particularities of SEA turned out to be too tough of a nut to crack for the internet giant, resulting in its withdrawal in 2016. 

Most notably, the company failed to gain traction with consumers, whose shopping behavior was far better understood by local rivals Shopee and Carousel. 

Their platforms also featured far higher and more meaningful consumer interactions as testament to better product development in response to local tastes.

Companies will continue to fail, many unrelated to Covid-19 – and we should continue to learn from the failures. Without them, we would know for sure that we are not realizing the whole potential of the tech ecosystem. 

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at