By Daina Beth Solomon
MEXICO CITY (Reuters) – SoftBank-backed used-car platform Kavak has become Mexico’s first tech “unicorn” after reaching a $1.15 billion valuation in its latest funding round last month, Chief Executive Carlos Garcia told Reuters.
The Mexico City-based startup has raised over $400 million in total funding since its founding four years ago, with Japan’s SoftBank, Hong Kong’s DST Global and U.S.-based Greenoaks Capital leading the recent round, Garcia said in an interview on Wednesday.
The company is SoftBank’s most recent Latin American investment to become a unicorn – lingo for tech startups valued at more than $1 billion – after delivery app Loggi and gym membership app Gympass, both from Brazil, and Colombian delivery app Rappi.
Japanese tech investor Softbank last year vowed to deploy $5 billion in the region, which Mexican investors praised as a potential game changer for young companies that struggle to fundraise locally.
“It’s really humbling for us to be the first Mexican unicorn. It’s something really important for the ecosystem in Latin America, and especially Mexico,” Garcia, 37, said.
Kavak, an online platform for buying and selling secondhand cars with operations in Mexico and Argentina, is laying plans to launch in Brazil early next year, Garcia said.
Kavak entered Argentina in August through its merger with used-car platform Checkars.
Garcia said he plans to hire 500 people within a year in Brazil, Latin America’s largest economy, adding to 800 current employees.
He expects Kavak to turn a profit in the next couple of years, and will consider going public within three years, he said.
Despite the hit of the coronavirus crisis, Garcia said traffic has recovered to pre-pandemic levels as shoppers seek alternatives to public transportation.
Nicolas Berman, a partner in Argentina’s Kaszek Ventures, one of Kavak’s largest shareholders, said investors were eyeing the long game in the used car industry, which represents $160 billion between Mexico and Brazil.
“It’s a massive market, and it’s completely underserved,” he said.
(Reporting by Daina Beth Solomon; Editing by Leslie Adler and Jonathan Oatis)