The history of Kavak, Mexico's first unicorn
Kavak launched in 2016 to fix Mexico's broken used-car market and in 2020 became the country's first unicorn. This is the story of its climb to an 8.7 billion dollar valuation and its sharp return to reality.
Buying or selling a used car in Mexico used to be a gamble. Opaque prices, tampered odometers, dubious paperwork, sellers who vanished. Carlos García Ottati lived it firsthand: after relocating to Mexico he struggled both to sell one car and to buy another. Out of that frustration came Kavak, a company that within a few years would become the symbol of a new Latin American startup era and, later, a cautionary tale about growing too fast.
Three founders and an old problem
Kavak was founded in August 2016 in Mexico City by three partners. Carlos García Ottati, a former executive at the e-commerce firm Linio, became CEO. His sister Loreanne García, a Stanford MBA and ex-McKinsey, ran people operations. Roger Laughlin, with stints at Groupon and Linio, led technology.
The idea was not to invent a new market but to tame one that already moved millions of transactions a year under low trust. Instead of being a classifieds board, Kavak chose to buy cars, inspect them, recondition them and resell them with a warranty. Controlling the whole chain —inspection, reconditioning, logistics, financing— was the bet to solve the problem at its root.
The model: buy, fix, guarantee
The heart of Kavak is its reconditioning centers. Every vehicle passes through hundreds of inspection points backed by data and algorithms to set price and detect fraud. The company came to run dozens of logistics hubs across its markets and built the largest reconditioning center in Latin America in São Paulo, Brazil.
- Direct purchase of used cars from individuals, with fast payment.
- Inspection and reconditioning before resale, with warranty and returns.
- Kavak Capital, its financing arm to widen access to auto credit.
- A digital platform that replaces face-to-face haggling with fixed, transparent prices.
The underlying thesis was almost social: if financing a car becomes accessible, the middle class of emerging markets can grow. As García Ottati put it in 2021, financing was the real engine.
If we do our job well, in the next 20 years the middle class should grow by 30% in emerging markets just by granting financing products. — Carlos García Ottati, CEO of Kavak
2020: Mexico's first unicorn
In October 2020, mid-pandemic, Kavak closed a 225 million dollar Series C led by SoftBank and DST Global, with Greenoaks participating. The round valued the company at 1.15 billion dollars and made it the first Mexican unicorn in history. By then it had already raised more than 400 million dollars.
The pace was dizzying. In April 2021 came a 485 million Series D at a 4 billion valuation. And in September of that year, a 700 million Series E led by General Catalyst —with Tiger Global, Founders Fund, Ribbit and others— doubled the valuation to 8.7 billion dollars. Kavak became the most valuable startup in Latin America after Nubank.
Expansion across three continents
With the capital, Kavak left Mexico for Brazil and Argentina, then Chile, Colombia and Peru. In 2022 it leapt beyond the region: it landed in Turkey and, that October, in the Middle East —the United Arab Emirates, Oman and Saudi Arabia— with an announced investment of 130 million dollars over two years. Entry into the UAE and Oman was accelerated by acquiring the Omani company Carzaty.
The return to reality
Aggressive growth came at a cost. By 2022 operational problems and cash burn were evident, made worse by expensive advertising deals. Rounds of layoffs followed, country managers departed, and in 2023 Kavak shut down its Colombia and Peru operations. The profitability target for 2023 slipped.
The symbolic blow came in April 2025: Kavak raised 127 million dollars from SoftBank and General Atlantic, but at a valuation slashed by roughly 6.5 billion, down to about 2.2 billion. A drop of around 75% from the 8.7 billion peak. The company that had embodied the region's optimism was back on the ground.
What Kavak's story leaves behind
Kavak still operates in about a dozen countries and reported reaching its first profitable month in December 2025. Its story mirrors a whole generation of startups: a solid idea that solves a real pain, growth funded by cheap capital, and the harsh correction when rates rise and money gets expensive.
The lesson for any service or sales business is clear: trust and customer experience can build an empire, but operational discipline decides whether that empire survives. Selling more is useless if every sale costs more than it earns.
Sources
- TechCrunch — https://techcrunch.com/2021/09/21/mexicos-kavak-raises-700m-for-its-used-car-marketplace-doubling-its-valuation-to-8-7b/
- Bloomberg — https://www.bloomberg.com/news/articles/2021-09-22/used-car-startup-kavak-valued-at-8-7-billion-in-funding-round
- Bloomberg — https://www.bloomberg.com/news/articles/2025-04-15/mexico-car-dealer-kavak-s-valuation-slashed-by-6-5-billion-as-market-sours
- Bloomberg Línea — https://www.bloomberglinea.com/english/kavak-steers-into-dubai-oman-and-saudi-arabia-as-mexican-unicorn-chases-growth/
- PYMNTS — https://www.pymnts.com/news/international/2022/kavak-expands-to-emea-with-turkey-launch/