The Mexican used car marketplace Kavak raised $485 million in a Series D funding round led by D1 Capital Partners, Founders Fund, Ribbit, and BOND. The company is now one of the top five highest-valued startups in Latin America, valued at $4 billion, which is more than three times higher than it was in the previous funding round in October 2020, when the startup’s value was $1.15 billion.
Kavak operates in Mexico and Argentina, while the Brazilian market is on the rise. The company recently had a soft launch in Brazil and plans to use the new funding for a full launch in the next 60 days, as well as expanding outside of Latin America in the next two years.
Kavak’s total capital raised to date is more than $900 million. The company buys cars from individuals, refurbishes them, and offers warranties to buyers.
“In Latin America, 90% of the [used car] transactions are informal, which leads to a 40% fraud rate. Instead of buying a new car, they can buy a better car that still has all the warranties. It’s a really aspirational process,” said Carlos García Ottati, Kavak’s CEO and co-founder.
Kavak is trying to fill the gaps in the market by offering a comprehensive service for people buying a used car. The Brazilian used car market has similar lacks in infrastructure, too, but the country is a bit more developed, said Garcia. Credit cards and loans are more available in Brazil, offering competition to Kavak.
“80% of people in emerging markets don’t have access to a car. We want to go into big markets where customers are facing similar problems and where Kavak can really change their lives,” Garcia added.