By Cassandra Garrison

MEXICO CITY (Reuters) – Mexican used-car platform Kavak said it has more than doubled its valuation to $8.7 billion based on its latest funding round, making it the second-most valuable startup in Latin America as it eyes further expansion beyond its home market.

Carlos Garcia (Kavak’s chief executive) said the Mexico City-based startup made $700 million from its Series E round. That makes it second only to Nubank in Brazil among the top-valued startups within the region. (https://www.reuters.com/business/finance/buffett-backed-nubank-seek-ipo-valuation-over-554-bln-sources-2021-08-25)

The injection of capital has delivered a boost to Kavak’s plans to expand outside the region as a one-stop shop for browsing, purchasing and financing pre-owned cars via an app.

Kavak stated that funding was led US venture capital firm General Catalyst. SoftBank Group Corp billionaire Peter Thiel, SoftBank Group Corp and Singapore-based gaming, e-commerce and company Sea Ltd and Tiger Global were also involved. Ribbit Capital and hedge fund D1 also joined the group.

The new funding round is the latest sign of an aggressive push into Latin America’s startup scene by Japan’s SoftBank, which last week launched https://www.reuters.com/business/softbank-renews-bet-latin-america-with-3-bln-fund-2021-09-14 a $3 billion fund to invest in the region’s technology companies.

Kavak, founded nearly five year ago in Mexico and then expanded to Argentina in 2020 before landing in Brazil in this year’s largest market.

According to CEO Garcia, the company’s next focus will be on emerging markets outside of Latin America. He said that announcements may come in six months.

He said that they are looking to outside the region as a next step. We want to enter the largest, most fractured market, where we can make a difference, and where users can live better. So we are not limited to Latin America.

Kavak previously said it had doubled its valuation to $4 billion (https://www.reuters.com/business/finance/mexican-used-car-startup-kavak-hits-4-billion-valuation-2021-04-07) just months ago after an earlier investment round.

Garcia explained that Kavak has experienced rapid growth since its initial investment round. This was because more people were looking for an alternative than peer-to-peer vehicle buying, which could be risky and unreliable.

The coronavirus pandemic saw more demand for pre-owned vehicles as the public transport system was shut down and people began to look into purchasing them. Kavak claims that the firm now employs 5,000 people in Latin America. The company had 300 employees a year earlier.

Garcia explained that the severe shortage in semiconductors which hit the global automotive industry first made its way to the United States was now starting to seep into Mexico’s market.

The U.S. is experiencing a shortage in products within the new and used vehicle industries. Garcia stated that we are starting to notice this trend in Latin America and believe it will be a major driver for Kavak over the next few months.

Kavak draws inspiration from Chinese companies such as Didi Global Inc for its “super app experience”, offering multiple services via a single application.

Garcia stated that Chinese consumers have similar consumer behaviors to Latin America.

Garcia stated that the “composition of people there and how they live is more like Latam than how Americans live.” It’s much easier to consider logistics and how to reach users.