There are hard problems, then there’s building a profitable used-car marketplace in a developing market. But the Kavak team has the rare trait of running towards hard problems, not away from them, and we’re excited to join Carlos and team as they continue enabling fair, transparent, and secure auto ownership for millions of people across Latin America and beyond.
The lifecycle of a used-car transaction is incredibly complex: demand forecasting, pricing, inspection, reconditioning, warehousing, marketing, underwriting, delivery, servicing. Each step must be tightly integrated with the next. Turning inventory over in less than days is hard. Doing it thousands of times every month, at scale, is harder. But that’s when the economics really start to shine.
When Carlos and the Kavak team set out to transform the used-vehicle market in the region, much of the necessary infrastructure just didn’t exist. Financing was limited, reconditioning was fragmented, end-of-life auctioning was informal. So Kavak built it all, essentially starting 10+ companies in one. Ten years later, with many hard lessons learned along the way, Kavak now operates profitably across Mexico, Brazil, Chile, Argentina, and the GCC region.
The contrast with the traditional used car buying experience is stark. Outside of Kavak, a car buyer sources through a newspaper ad, a recommendation from their mechanic, or an informal broker. Financing options are scarce. Transactions require meeting strangers, wiring money, and hoping the car doesn’t break down on the drive home. In the US, we may take for granted that we have a robust network of used-car dealerships that provide an adequate service. But Kavak operates in markets where buyers don’t have that luxury.
Kavak replaces that uncertainty with trust. Buyers gain verified inventory, transparent pricing, and access to fair credit. Sellers get a seamless transaction with certainty of funding. The combination results in classic network effects where higher liquidity improves the value proposition for both buyers and sellers. And Kavak continues to realize benefits of scale to widen its competitive advantage versus informal or offline alternatives.
And yet, Kavak is still early. Despite being the regional leader, it handles less than 1% of the used-vehicle transactions in its markets. The foundation has been built and the opportunity ahead of them is massive.
That brings us to why we’re making our first large, late-stage investment in the region now. Kavak is already scaling the machine. Now, the company can scale indefinitely on the back of one of the most impressive AI implementations we have seen.
In 2017, Carlos sent an email to his executive team titled “let’s hire robots” – he envisioned a future where every step in the complex value chain could be handled by a function-specific agent. A world unconstrained by human resources where the company could do 1,000x more work. With Kavak as the orchestration layer and providing the connectivity to the ‘real world’, they could scale to millions of annual transactions without requiring infinite headcount.
He was ahead of the times with this idea, and he was right. Today, Kavak has re-architected its operations around AI as the foundational enablement layer. Every new problem is faced with the question: “can I solve this with electrons, or do I need blood?” Kavak’s AI agents can already price vehicles based on projected demand much better than the blue book equivalent or negotiate terms with a new customer for an auto equity loan with better results than a human. Improvements at every step of the value chain compound to an aggregate value proposition that others struggle to compete with.
The depth of AI adoption across the company is unlike anything else we’ve seen. It simply is not an option to disregard AI at Kavak. Combining atoms (vehicle sales) with bits (AI agents), Kavak is well-positioned to be one of the big beneficiaries of the AI revolution.
We believe that Kavak will become the blueprint for how operationally complex businesses fully integrate AI into their core workflows, while delivering a dramatically better experience for their customers. We’re thrilled to be backing Kavak as they continue transforming how people buy, sell, trade, finance, service, and repair one of their most valuable assets.
