Kavak, a Mexican used-car platform, announced that its valuation has more than doubled after raising a staggering sum of $700 million on Wednesday, in a Series E funding round. The round was led by venture capital company, General Catalyst, and had the participation of other investors including Tiger Global, Spruce House, D1, SEA, Founders Fund, Ribbit Capital, and SoftBank. The funding announcement comes just five months after Kavak raised $485 million in a Series D at a $4 billion valuation
Kavak’s funding is remarkable, and here’s why. The funding is a massive amount for any startup, much less one based in Latin America. Also, the investment marks the second time this year that Kavak has doubled its valuation. Additionally, the round makes Kavak the second most valuable startup in all of Latin America (according to claims by the company’s Chief Executive, Carlos García)— the first being Brazilian fintech Nubank, which was valued at $30 billion earlier this year.
According to the company, Kavak is on a mission to bring transparency, security, and access to financing to the used car sector. It promises to ensure “reliable” transactions that mitigate fraud and aims to raise used car standards from a mechanical and safety point of view by using artificial intelligence and data technology. The company also offers its own financing through its fintech arm, Kavak Capital, which it launched about 18 months ago.
Managing Director of General Catalyst, Adam Valkin, is of the opinion that Kavak has established itself as “the clear leader” in Latin America’s pre-owned car market. “The company has developed a playbook for providing a transformational customer experience with a compelling and efficient economic model,” he said in a written statement. “We are excited for Kavak to expand into other emerging markets where a similar opportunity exists to drive financial inclusion and empower the middle class through access to car ownership,” Adam Valkin added.
Kavak plans to use its new capital to expand across Latin America, with plans to begin operating in several other markets over the next 12 months. In the longer term, Kavac “will most likely focus on expanding into emerging markets beyond Latin America”, Chief Executive Carlos García said. “We want to get into the biggest, most broken market where we can really break into, where we can really improve the lives of users, so we are not agnostic to Latin America,” he added. Kavak also plans to continue expanding its team, as well as doubling down on product development.