Mexican used-car platform Kavak raised $700 million in a Series E funding round that values the startup at $8.7 billion, the second-most valuable venture in Latin America, according to Reuters and other news outlets on Wednesday (Sept. 22).
The funding was led by General Catalyst with participation by Tiger Global, Spruce House, D1, Ribbit, SoftBank and others.
The fresh infusion of capital will fund the company’s expansion in Mexico, Brazil and other emerging markets, with a possible a move into Turkey, a source told Bloomberg. The new funds will also be used to boost car loans.
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The startup, launched in 2016 in Mexico City, focuses on the digital buying and selling of used vehicles, auto financing and car delivery to buyers’ homes. Kavak employs almost 5,000 people in Latin America and has 40 logistic centers and reconditioning shops, according to its website.
Kavak is Mexico’s first unicorn and is the second-most valuable startup in Latin America behind Brazilian online bank Nu Pagamentos, which has a valuation of roughly $30 billion. Kavak expanded into Argentina last year and moved into Brazil, its largest market, in July, according to a press release.
Brazil is also home to the Kavak’s largest vehicle reconditioning center, the biggest ever built in Latin America. The company’s move into Brazil followed a $481 million Series D funding round in July that put the startup’s valuation at $4 billion.
“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,” Kavak CEO and Co-founder Carlos Garcia said.
The semiconductor shortage, which hit the U.S. first, is now affecting the automobile sector in Mexico, Garcia 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,” Garcia said.
Garcia said he’s targeting a “super app experience” that would provide several products and services on a single app-based platform.
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