College textbook rental startup BookRenter has raised $40 million in funding from Adams Capital Management, Comerica Bank, Focus Ventures, Lighthouse Capital Partners, Norwest Venture Partners, and Storm Ventures. This brings BookRenter’s total funding to $60 million.
Similar to Chegg, Bookrenter wants to be the Netflix of textbook rentals. By renting textbooks, Students are able to save money by loaning textbooks for a fixed duration, usually a semester, and end up spending only the fraction of the cost of outright purchases. The system is simple: a student searches for a book (BookRenter now has 5.5 million titles) on the website using a title or ISBN, and places an order by selecting a rental period and delivery option. The book(s) are delivered complete with return UPS labels for easy shipping. And through BookRenter’s RapidReturns service, students can return their rented textbooks at participating college stores, who benefit from increased buyback activity and merchandise transactions.
BookRenter has also made a business of partnering with a number of colleges to set up a virtual rental store on their sites. Partners have access to the same selection of textbooks available on BookRenter’s site (which are electronically sourced from the largest textbook suppliers.)
Since last March, Bookrenter is the official book rental platform for 560 college bookstores in the U.S. serving 6 million students, or 31 percent of the college population (and eight of the ten largest independent bookstores). There are between 6,000 and 7,000 college bookstores nationwide.
For BookRenter, these university partnerships have been a wise move. Not only has the company created an automatic platform for the distribution of content to universities, but it saves students money and has also given universities a way to lure students back into book stores. According to NACS’ OnCampus Research from January 2011, compared to last year, customers of stores that offer BookRenter rentals are 21% more likely to rent from their college store and 10% more likely to shop at the bookstore for items other than textbooks.
And today, the company is announcing a strategic partnership with The National Association of College Stores (NACS) designed to help college stores become the source of affordable textbooks. NACS, through its subsidiary NACSCORP, will begin offering three new BookRenter services to its 3,100 member stores. These services include RapidReturns, Inventory Purchase and Fulfillment, and Warehousing.
BookRenter’s strategy is paying off in a big way. The company is growing like a weed in terms of both revenue and usage, and is quietly catching up to competitor Chegg. BookRenter’s 2010 revenue is expected to be in the range of $20 to $50 million in 2010. Of course, this is still behind competitor Chegg, which is projected revenues in the range of $130 million in 2010.
But the new funding should help BookRenter add more resources and products in the near future. The company is expected to expand by 600 percent this year alone. The new round of funding will used for product innovation, says CEO Mehdi Maghsoodnia. While he didn’t go into details, in the next 18 months, BookRenter will start executing a new digital strategy, which will be an entirely new way for students to consume content and professors to design courses.
The textbook rental space is no doubt a competitive arena and Chegg is a formidable opponent. Armed with $75 million in new venture funding, the textbook rentals giant is expected to pursue an IPO this year, just hired Netflix’s former COO, and has been making quite a few acquisitions.
That being said, textbook rentals are a huge space and just because BookRenter is the underdog, doesn’t mean it can’t continue to give Chegg a run for its money, and possibly overtake the giant in the next year.