SoftBank appraises investments in Mexican startups, Konfío and Kavak

Contxto – Back to the street rumors, people! If you think SoftBank has been too quiet lately, think again. 

According to Reuters, several people familiar with the group recently learned that the Japanese conglomerate is holding advanced investment talks with two Mexican startups: Konfio, the fintech company, and Kavak, a second-hand car marketplace are the two startups exploring funding opportunities with SoftBank.

Fintech and mobility, two Mexican delicacies

Konfio is an SME credit startup from Mexico City while Kavak is a marketplace for used vehicles. Based on these three anonymous sources, SoftBank is reportedly strategizing with Kavak. Two people also confirmed it’s appraising Konfio.

All of them were close to the matter but chose to remain anonymous because the information is still not public.

According to Reuters, SoftBank and Konfio declined to comment. However, Kavak’s CEO Carlos García said that SoftBank is continuously meeting with various Latin American startups. So far, no investment plans have been officially made.  

“We are always meeting potential investors and building up relationships for when the time is right. However, on our side, as of today we do not have any investment news to share,” said García in correspondence with Reuters.

When it comes to Mexico, it seems like the fintech sector is particularly relevant for SoftBank’s latest Innovation Fund. Not only did it previously invest in Clip but SoftBank’s investment partner Shu Nyatta said, “It’s about bringing services through tech to people who couldn’t access them before.” 

Also during a conference in May, he described Konfio as a startup helping small companies shut out traditional banking.

SoftBank’s game

SoftBank seems to be playing its own game. The company is, in fact, well-known for investing in similar companies across diverse markets to create synergistic bonds between them. For instance, a couple of days ago, we covered SoftBank’s investment in Brazilian second-hand car marketplace, Volanty. Sounds familiar, right?

Yeah, well this sounds schemingly strategic to me. By injecting enormous amounts of capital into two of the most promising competitors in the region’s largest markets, the company ensures market domination. Through market consolidation, this will leave little space for others to compete. Genius.

Now, SoftBank is not the only one taking a look down south. Other U.S.-based venture firms are already scouting and investing in Mexican companies. Such is the case with Andreessen Horowitz and Sequoia Capital, at least. 

Daniel Green, partner at the Silicon Valley’s law firm Gunderson Dettmer, said “the market is having to play catch-up to SoftBank. They are analyzing dozens and dozens of investments.”

Funny, huh? Now it’s not investors having to catch up with startups, but the other way around.

What seemed to be a scarcity problem a few years back could now be a surplus issue. Moving forward, the challenge will be execution and exceeding or reaching expectations of these global investors. Otherwise, perhaps they will stop pouring capital in the region. 

“Having someone huge like SoftBank coming in really fills the financing gap required in a healthy entrepreneurial ecosystem,” said Roberto Charvel, San Francisco-based investor at MatterScale Ventures.

Once the investments are formalized (if so), we’ll be there to let you know. Meanwhile, enjoy this recap of previous SoftBank investments we’ve covered before: Rappi, Clip, Ayenda Rooms, Gympass, Loggi, Creditas.

-VC