Kavak secures USD 485 million in funding, eyes Latin America expansion

Kavak, a Mexico-based used-car platform, has reportedly reached a valuation of USD 4 billion after securing USD 485 million during a new funding round. This makes it the fastest-growing as well as the most valued company in Latin America.

The latest funding round saw participation from American investment firms such as D1 Capital Partners, Ribbit Capital, Founders Fund, and Bond Capital.

The fresh investments will allow Kavak to expand its reach in Brazil in the upcoming months, claimed the co-founder and CEO Carlos Garcia. Brazil, being the largest economy in Latin America, will provide significant revenue generation prospects for Kavak in the subsequent years.

For those unaware, Kavak was founded in the year 2016 and is backed by Japanese multinational conglomerate SoftBank Group Corp. It became the first tech startup to acquire unicorn status last year after it recorded a valuation of around USD 1 billion.

The company intends to simplify purchasing used cars in emerging countries where buyers usually struggle to obtain loans and dodge fraudulent activities. Kavak had launched its financing arm Kavak Capital last year, which allowed the company to offer interest rates of around 14-20% as compared to traditional interest rates of over 60%.

However, the speedy expansion came with its challenges, with several users criticizing the company for its customer service. Garcia added that to address these issues, the company has hired 1,500 people in Mexico since the last three months, bringing the company’s overall workforce to 2,500.

Apart from Brazil, Kavak is likely to expand its reach to other Latin American countries within 12 months, with additional plans for a global expansion in the next two years. In this context, Garcia claimed that expanding beyond the Atlantic is one of Kavak’s primary objectives.

Source Credits –

https://www.reuters.com/article/us-mexico-kavak/mexican-used-car-startup-kavak-hits-4-billion-valuation-idUSKBN2BU0FH