Kavak, the Mexican used car marketplace, announced it received a $700 million Series E. The round was led by General Catalyst and includes other investors, among them Tiger Global, Founders Fund, and Softbank.
The new round of investment doubles Kavak’s valuation this year, reaching $8.7 billion. This makes the company the second-highest valued startup in Latin America after Brazilian digital bank Nubank, valued at $30 billion.
The Series E is the second massive investment Kavak receives in 2021. It raised a Series D of $485 million only five months ago.
Why are investors pouring money into Kavak?
The company was created in Mexico by Venezuelan entrepreneur Carlos García Otatti. Since the beginning, his goal with Kavak has been to achieve a safer, seamless, and more efficient way to buy or sell used cars in Latin America.
More than 90% of transactions in this market are done in the back market, which explains a 40% fraud rate. Aside from Mexico, Kavak also operates in Argentina and Brazil.
The company is not profitable yet, but it has duplicated its revenue every 4 months. In less than two years it has grown its employee base 16x, reaching 5,000 people. It has 40 logistics hubs and a financing arm called Kavak Capital.