Funding Round attributes
Kavak is a Mexican startup founded in 2016 by the Venezuelan entrepreneur Carlos García Ottati. The company operates a digital platform for buying, selling, and financing used cars in Latin America. In March 2025, Kavak raised $127 million in a funding round led by SoftBank Latin America Fund and General Atlantic, which reduced its valuation from $8.7 billion in 2021 to $2.2 billion, a 75% decrease. Additionally, it obtained two credit lines totalling $200 million from Goldman Sachs and HSBC Holdings.
The funds raised will be used primarily to strengthen Kuna Capital, Kavak’s finance division, which finances approximately 60% of the vehicle purchases on the platform. In addition, they will focus on strengthening the core operations in Mexico, which currently account for about 60% of the company’s total business. The objective is to achieve annual profitability in all markets by the end of 2025 and to prepare a possible initial public offering within three to five years.
The capital raising process began in February, and investor commitments were signed in March. Less than 30% of the 2021 unicorns have raised funds in the last 3 years, and of them, almost half have had so-called "downward rounds", in which investors value their companies at lower levels than in the past.
“My view on ‘up rounds’ and ‘down rounds’ is simple: entrepreneurs should focus on developing the long-term potential of their company and take care of customers, employees, and shareholders along the way,” said Carlos Garcia Ottati, CEO and co-founder of Kavak.
The participation of investors such as Softbank Latin America Fund and General Atlantic in this round is significant, as both funds were previous investors in Kavak. Their decision to continue backing the company, even at a reduced valuation, reflects confidence in Kavak's long-term potential in the used car market in Latin America. Luis Cervantes, General Atlantic's Mexico country manager, noted that platforms such as Kavak still have significant potential in a growing market.
Kavak is focused on improving operational efficiency and strengthening its presence in key markets, especially Mexico. The company uses digital tools to optimize inventory turnover, which has increased by 60% in monthly volume and rotates 3.5 times faster than the previous year. In addition, Kuna Capital has issued nearly $1 billion in loans over the past four years, demonstrating the importance of its financing arm in Kavak's business model.
"We have achieved profitability in some markets in a few months. We have not yet reached annual profitability, but we are on track to achieve it in all markets by 2025 and hopefully by the end of the year overall."
Continued support from institutional investors and the securing of significant credit lines provide Kavak with a solid foundation to face market challenges and continue its growth. Although the company has faced difficulties, such as downsizing and closing operations in Colombia and Peru in 2023, its focus on operational efficiency and strengthening key markets such as Mexico is are strategic step toward profitability and a possible IPO in the future.
