Mexican startup Kavak enters Brazil

"Our business model is growing fast, due to our ability to formalize the pre-owned car market through data technology and artificial intelligence (AI),” Carlos García Ottati, Kavak’s CEO, said.

The AI technology allows Kavak to make the process of buying and selling cars more efficient, reduce reconditioning time and evaluate different financing options, in addition to eradicating fraud risks by eliminating dealing with third parties and granting guarantees in a sector that is prone to various types of crimes due to the informality in transactions, García Ottati added.

Kavak, founded in 2016, expects to hire more than 1,000 people in the next six months and establish the largest vehicle reconditioning center in Latin America in São Paulo, to achieve the purchase of 100,000 cars and the sale of 50,000 by the end of 2022.

The startup estimates more than 200,000 units purchased in the next two years of operation worldwide.

The Mexican company began operations in Argentina in August 2020, and in October of the same year achieved the status of the first Mexican unicorn by obtaining a valuation of $1.15 billion following a Series C investment round, led by Japanese group Softbank, and in which US-based Greenoaks Capital and Hong Kong-based DST Capital also participated.

Kavak was announced on that financing round by law firms Morrison & Foerster in the US, with a team led by partners Randy A. Bullard and Juan Delgado, with associate Axel Miranda, and in Mexico by Mijares, Angoitia, Cortés y Fuentes, with a team led by partners Ricardo Maldonado Yánez and Carlos Ernesto Orcí Berea.

Four months later, Kavak quadrupled its valuation to $4 billion, after raising more than US$900 million in venture capital, making it one of the most valuable startups in Latin America.

In addition to its entry into the Brazilian market, Kavak also announced this month the creation of four new global centers for technology development with headquarters in Mexico, Brazil and Argentina, which will incorporate more than 500 software development engineers in the region.

The project will be led by Fernando Scasserra, former director of engineering at Mercado Libre, who joins Kavak as chief technology officer, with the mission of creating and leading the company's new global team of engineers.

According to Scasserra, the objective of the project will be to redesign the customer experience by building a team in charge of developing new systems and applications for the processes of buying and selling and financing pre-owned cars.