Kavak Raises US$127 Million, Valuation Drops 75%

Mexican used car platform Kavak has raised US$127 million in a new funding round, marking a sharp valuation decline from US$8.7 billion in 2021 to US$2.2 billion in March 2025—a 75% drop. The round, co-led by SoftBank and General Atlantic, also secured Kavak two credit lines totaling US$200 million from Goldman Sachs and HSBC Holdings.

“This was a small, insider-only round. We were not too price-sensitive because the goal was to strengthen our balance sheet and secure the working capital facilities needed to continue growing our credit business,” said Carlos García Ottati, founder and CEO, Kavak.

The capital will primarily support Kavak’s financing arm, Kuna Capital, which funds about 60% of vehicle purchases on the platform. It will also reinforce the company’s core operations in Mexico, which now generate roughly 60% of its total business.

“We have not reached annual profitability yet, but we are on track to achieve it in all markets by 2025—hopefully by year-end overall,” García said in an interview with Bloomberg. He also indicated plans for a potential public offering within three to five years.

Founded in 2016, Kavak was once Latin America’s most valuable unicorn, achieving a US$4 billion valuation in 2021 and doubling it later that year through a US$700 million Series E funding round. However, rising US interest rates and broader macroeconomic pressures have dampened investor interest in high-risk ventures like tech startups.

“The recent macro environment has been challenging, but we believe platforms like Kavak still hold significant potential in a growing market,” said Luis Cervantes, Managing Director, General Atlantic Mexico.

Kavak’s aggressive international expansion in 2022 exposed operational challenges that led to strategic retrenchment. In the first quarter of that year, the company spent US$86 million in cash, including major advertising deals with professional athletes and sports teams. Rising costs and expansion difficulties prompted layoffs and the closure of operations in Colombia and Peru by 2023.

Despite García’s initial projections in 2022 that the company would achieve profitability by 2023, those goals remain unmet. Kavak has since shifted its focus to operational efficiency and strengthening its core markets, particularly Mexico.

With its new valuation, Kavak no longer holds the title of Latin America’s most valuable startup. Its US$2.2 billion valuation now matches that of crypto firm Bitso, while Colombian delivery and ride-hailing platform Rappi leads with a US$5.2 billion valuation.