The Mexican-based venture, Kavak is a used car platform that recently raised $700 million in funding led by General Catalyst. The other participants include Tiger Global, D1, Spruce House Softbank, Ribbit and others. The startup is now valued to be $8.7 billion as is stated to be the second most valuable venture in Latin America by Reuters.
This recent funding will allow the startup to expand in emerging markets as well as Mexico and Brazil. Also, the new funds will be used for car loans processes. Being launched in 2016, the startup initially focused on digital buying and selling of used vehicles. It also included car delivery and auto financing for the buyers. There are around 5,000 employees in Latin America in the startup. These employees are from the 40 logistic centers and reconditioning stops the company owns.
Kavak CEO and Co-founder Carlos Garcia said, “We’re looking outside the region for our next step. We want to go into the biggest, most broken market where we can really make a dent, where we can really make users’ lives better, so we’re not agnostic to Latin America,”
Expansion of Kavak
After its Mexico operations, the company’s home is also in Brazil where Kavak’s largest vehicle reconditioning center is located. It is also the biggest vehicle reconditioning center ever built in Latin America. This move to Brazil led to a series D funding round of $481 million in July. This made the company valued at $4 billion.
Furthermore, Gracia added, “In the U.S., you’re seeing a shortage of products in the new and used car industry. We’re starting to see this early trend in Latin America; we think it’s going to be a huge driver for Kavak in the next few months,”
It is known that the semi-conductor shortage and other supply chain shortages have hit the industry badly. Without new car sales, the selling of used cars would be a challenge. The US was the first country to be hit by a semi-conductor shortage, now it is also affecting the sector in Mexico.
Kavak continues to focus on supplying increasing demand. Gracia said that they are targeting a “super app experience”. By providing several products and services in one single app, more customers are expected to buy from their platform. Nowadays everyone prefers online purchases and the sales in other several online selling applications have been boosted for the very same reason. As Kavak already delivers it’s cars to the customers, they now plan to focus on their online features.