Kawak, a Mexican used car start-up, raised a record amount of funds to fund a major expansion in Brazil and reached an estimated $ 4 billion.
The Mexico City-based company plans to operate in Brazil after the Series D financial round, which raised $ 485 million and was led by T1 Capital Partners, Ripid Capital, Bond and Founders Fund Management.
Carlos Garcia, co-founder and CEO of Kawak, said the company, which currently has a presence in Mexico and Argentina, could enter other countries in the next 24 months.
“The market is huge, it’s broken, it’s really informal,” Garcia said in an interview, adding that the used car market in Mexico alone reaches $ 60 billion annually, and 80 percent of those transactions are made between individuals.
“The epidemic has increased consumer confidence in digital platforms and the demand for cars will continue to grow globally due to social distance needs,” he added.
Kawak buys used cars through its app, refurbishes them, and then sells them to consumers with the option of providing medium-term financing. The company’s transactions increased during epidemics because locking operations prompted buyers to travel safely in their own cars and look for cheaper second-hand options. In the last six months, the company has grown to 500 to 2,500 employees.
The company plans to use the funding to increase its car inventory to 30,000 vehicles over the next 18 months, to 12,000 today, to increase its financing credit taxes, and to invest in technology and infrastructure, including warehouses and refurbishment centers.
With Kawak’s initial investment in Brazil, the company will have more infrastructure than Mexico, and its housing market is currently huge.
Cavac was founded in 2016 after facing various setbacks as Garcia tried to sell his car to relocate from Colombia to Mexico until he received false information about the car from mechanical problems. This led him to add transparency in a market that is prone to fraud and potential to grow in emerging markets beyond Latin America, Garcia said.
In previous rounds, Kawak Softbank Group, Greenox Capital, DST Global and Cossek Ventures have also given their approval. Garcia declined to give an estimate of when an initial public offering could be made.