Mexican used-car platform Kavak’s valuation drops to $2.2 billion, down from its 2021 peak of $8.7 billion, reflecting broader VC pullbacks and operational shifts in LATAM’s tech ecosystem.
Mexican unicorn Kavak has seen its valuation slashed by 75% to $2.2 billion, according to internal company reports reviewed by Bloomberg. This marks a stark reversal from its $8.7 billion valuation during LATAM’s 2021 tech boom. CB Insights data shows regional venture capital investments fell 38% in 2023, with Kavak exiting Colombia and Peru to concentrate on Mexico’s used-car market, which now generates 60% of its revenue. ‘This is a textbook down round reflecting broader market discipline,’ said Carlos Hernandez de la Fuente, CB Insights’ LATAM lead analyst.
Valuation Reset Signals Regional Reckoning
Kavak’s $2.2 billion valuation, confirmed in internal February 2024 reports, positions the Mexico City-based firm among the highest-profile casualties of LATAM’s post-pandemic market correction. The company’s 2021 $8.7 billion valuation came during a record year that saw $15.9 billion flow into regional startups, per LAVCA data.
Operational Pivot Amid Investor Scrutiny
CEO Carlos García Ottati has prioritized Mexico’s used-car market while exiting Colombia and Peru. The moves follow Kuna Capital’s $1 billion loan package aimed at improving inventory turnover, which Kavak claims now occurs 3.5x faster than in 2022. ‘The focus is unit economics over growth-at-all-costs,’ said Kuna’s CFO during a 15 March investor call.
Broader Ecosystem Implications
European mobility firms like Cazoo and Auto1 provide cautionary parallels, having cut valuations pre-IPO. Kavak’s IPO readiness claims face skepticism given Nasdaq’s 16% YTD fintech index decline. ‘LATAM’s next unicorns must prove capital efficiency earlier,’ warned TechCrunch’s Mexico City correspondent in a 10 April analysis.
Contextualizing the downturn, 2021’s investment surge saw 25 LATAM startups reach unicorn status—a figure that dropped to six in 2023. Similar corrections occurred during the 2017-2018 crypto crash, when Brazilian fintechs like Nubank delayed IPOs. Today’s focus on sustainable growth echoes lessons from Asia’s post-2015 ‘unicorn winter,’ where survivors like Grab prioritized profitability over expansion.
Parallels also emerge with Europe’s 2022 tech reset, where Auto1’s share price fell 80% post-IPO despite initial hype. Like Kavak, these firms discovered public markets reward EBITDA over growth theater—a reality now reshaping LATAM’s startup playbook.
