Kavak Entrepreneurs. (Photo: Diego Álvarez)
The Mexican platform that buys and sells used cars, Kavak, reached a valuation of $ 4 billion after raising $ 485 million in new funding, the company said this week, making it one of the best valued startups in Latin America.
Kavak, which was founded in 2016 and is backed by Japan’s SoftBank Group Corp, became Mexico’s first tech “unicorn” in October after reaching a value of just over $ 1 billion.
Kavak’s flight to Brazil, bound for Europe
The new injection of capital will help Kavak –An online platform to buy and sell second-hand cars that operates in Mexico and Argentina– to launch in Brazil in the coming months, announced its executive president, Carlos García.
The executive said he expected Brazil, Latin America’s largest economy, to eventually overtake the two initial markets for Kavak, which aims to simplify buying used cars in emerging markets.
“We definitely envision Brazil as the biggest market for Kavak,” Garcia said in an interview.
The company is considering expanding to other parts of Latin America over the next 12 months and aims to take the business to emerging markets outside the region in about two years.
“Crossing the Atlantic is one of our ambitions,” added Garcia.
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Kavak’s latest round of funding, which closed in January, attracted US investment firms such as D1 Capital Partners, Founders Fund, Ribbit Capital and Bond Capital.
Kavak launched its financing arm in May 2020 Kavak Capital. García assured that 60% of clients now use this internal option, which offers interest rates of 14% to 20%, compared to traditional options that, according to him, offer rates of up to 60%.
However, the rapid expansion has also brought challenges: some users complain on social media about poor customer service.
Garcia recognized the need for more employees to handle these issues and recruited 1,500 people in Mexico in the past three months, bringing Kavak’s workforce to 2,500. (Reuters)
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