Kavak, the Mexican startup that disrupted the used car market in Mexico and Argentina, today announced its $ 485 million Series D, which now values the company at $ 4 billion. This cycle has more than tripled their previous valuation of $ 1.15 billion, which saw them become a unicorn just a few months ago in October 2020. Kavak is now one of America’s five most beloved startups. Latin.
The round was led by D1 Capital Partners, Founders Fund, Ribbit and BOND, and brings Kavak’s total capital raised to date to over $ 900 million. Kavak recently launched smoothly in Brazil, and this new round of funding will be used to develop the Brazilian market and beyond, said Carlos García Ottati, CEO and co-founder of Kavak. The company plans to do a full launch in Brazil within the next 60 days, García said, and we can expect to see Kavak in markets outside of Latin America in the next 24 months, he said. added.
“We were built to solve the problems of emerging markets,” García said.
Kavak, which was founded in 2016, is an online marketplace that aims to bring transparency, security and access to finance to the used car market. The company also offers its own financing through its fintech arm, Kavak Capital, and has more than 2,500 employees and 20 logistics and reconditioning centers in Mexico and Argentina.
“In Latin America, 90% of [used car] the transactions are informal, which leads to a fraud rate of 40%, ”said García, who faced these challenges when he moved to Mexico from Colombia a few years ago and bought a car from opportunity.
“My budget allowed me to buy a used car, but there was no infrastructure around. It took me six months to buy the car and then the car had legal and mechanical problems and I lost most of my money, ”he said. Kavak buys cars from individuals, refurbishes them and offers guarantees to buyers.
“Instead of buying a new car, they can buy a better car that still has full guarantees. It’s a really ambitious process, ”García said. The company, which is actually four companies in one given its areas of focus, was designed to be comprehensive in design to address the various gaps in the market, García said.
“When you start a business here [Latin America], you have to start multiple businesses because so many things are broken, ”he said. This is why the financing option, for example, has been key to their success, according to García.
Funding has always been hard to come by in Brazil, and as García said, the used car market also lacks infrastructure there. That being said, Brazil is Latin America’s fintech hub, and the space has made leaps and bounds over the past 7-10 years with companies such as Nubank, PagSeguro, Creditas, PicPay and others leading the way. As a result, credit cards and loans are now more widely available in the region, offering competition for Kavak Capital. Although Kavak has localized some of its products for the Brazilian market – namely creating a Portuguese version of the app and website – García said the markets are very similar.
“In Brazil, you still have the same problems as in Mexico, but Brazil is a little more developed, especially in fintech, which is light years ahead of Mexico,” he said. .
As the Brazilian product heads into racing, García said they already have plans for other regions, although he declined to name them.
“80% of people in emerging markets don’t have access to a car,” García said of the size of the global market. “We want to enter big markets where customers face similar issues and where Kavak can really change their lives,” he added.