Kavak aims to improve social mobility in Latin America by taking risk out of car transactions
Kavak, a Mexican fintech car company founded by 2010-11 Oxford MBA Carlos García Ottati has been valued at $1.1bn making it the first Mexican unicorn.
Kavak allows its customers to buy, sell and finance cars online through its digital platform. The company inspects and reconditions vehicles and manages each stage of the transaction. Crucially in the Covid-19 era, there is no need for showrooms, car salesman or physical paperwork.
Carlos García Ottati grew up in a military family in Venezuela. He struggled to focus in school but founded his first company, a lawn care business, when he was just 12 years old.
He has switched between entrepreneurship and corporate roles throughout his career, encompassing brand management and consulting. ‘At McKinsey, I worked with 11 companies in 8 countries. As an entrepreneur, seeing how other business leaders thought was an invaluable experience,’ he said.
After his stint at McKinsey, Carlos co-founded and led the Mexican arm of Linio.com, Latin America’s online marketplace.
‘Before I moved to Mexico, I was living in Colombia and had to sell my car there. It was a disaster: I was exposed to fraud, and ended up not selling the car, and buying another in Mexico. I was hustled in that process too – the car had legal and mechanical issues.’
Carlos’s experience was not uncommon, and he described how buying a car in Mexico was a process fraught with danger. ‘Our market research found that 40% of all car transactions had some sort of fraud associated with them, and it goes from the worst – being killed, or kidnapped – to hidden charges,’ he said.
Shaken by the process but determined to find a solution, Carlos built an algorithm that could assess the correct pricing for cars and process the legal mechanics behind the transaction. When he left Linio.com in 2016, he returned to these foundations and built Kavak.
‘I saw a tremendous opportunity. The market for used cars is always fragmented, for example in America the biggest player is CarMax with 1.8% of the market. In Mexico, nobody had more than 0.2%.’