Kavak, a prominent startup in the used car industry in Latin America, has taken a unique approach to raise funds for its expansion in the Brazilian market. The company has recently introduced tokenized debt, issuing nearly $1 million in commercial notes using the Liqi platform. Kavak’s aim is to raise over $5 million through this innovative method.
Tokenized debt offerings have gained traction in Brazil, and Kavak, being a Mexico-based startup focusing on the used car market, has leveraged this trend to secure liquidity and working capital in Brazil. The debt offering, facilitated by Liqi, one of the leading token issuers in the country, is backed by the cars available in Kavak’s inventory. It offers a 5.5% Annual Percentage Yield (APY) over a 12-month period.
Initially, the tokenized debt offering was made available to a select group of professional investors and private funds. However, the remaining tokens will be offered to the public, adhering to the regulations set by the Brazilian securities watchdog, known as CVM. Kavak’s ultimate goal is to raise up to $5 million to support its operations in Brazil.
Daniel Coquieri, the CEO of Liqi, highlighted the advantages of using tokenization to issue debt instruments compared to traditional methods. He emphasized that tokenization significantly reduces financial costs, with a 60% saving in infrastructure achieved through Liqi’s platform. Additionally, tokenization allows for smaller transactions and simplifies the process by eliminating intermediaries.
Coquieri also revealed that Kavak plans to expand this financing method to other Latin American countries where the company operates. However, he noted that implementing this approach in other nations may take time due to varying regulatory frameworks and compliance requirements.
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