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Indonesia's smaller cities catching eye of startup investors

Hip-hop star Jay-Z among those drawn by digitization potential beyond Jakarta

Demand for digital services from mom and pop stores and stalls known as "warung" is spurring startup investment beyond big cities in Indonesia.

JAKARTA -- Indonesian startups targeting the country's smaller cities are, slowly but surely, beginning to attract investor interest -- even from a world-famous hip-hop artist.

New companies focused on so-called tier 2 and 3 cities and engaged in sectors ranging from fintech and social commerce to digitizing family-run shops have raised tens of millions of dollars in the past few years. Investors are attracted to such startups as they are essentially diving into a potential blue-ocean market -- smaller Indonesian cities that are digital laggards and far from the ultracompetitive tech scene in places like the capital, Jakarta.

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