Five year old textbook rental startup Chegg is really starting to ramp up sales, we’ve heard. The average college student, they say, spends $900 per year on textbooks. Chegg saves them 70-80% of that by renting them the books instead of selling them outright.
Here’s how it works: students find the books they want by searching by ISBN, author, title or keyword. The rental price for the semester or quarter is just 20-30% of the full retail price, and are delivered within eight business days. At the end of the term, the students receive a pre-paid shipping box to return them. Students are even allowed to highlight books (but no writing in them).
The company was founded in 2003 at Iowa State University as a classifieds site. In the fall of 2007 the company changed their business to textbook rentals.
Revenues have soared to a roughly $10 million run rate, we’ve heard from a source, who also says they’ve just closed, or are about to close, a second round of financing from Kleiner Perkins – $15 million at a post money valuation of $60 million.
Chegg had previously raised $2.2 million from Gabriel Venture Partners and Maples Investments.
Update: The Chegg CEO is saying this report is “not accurate,” so we dug further. The company signed a term sheet with Kleiner a month or so ago and were aiming to close it by the end of October. Our understanding is that they had a competing term sheet from NEA as well, and have tried to get Sequoia to the table. The size of the round might also be larger than $15 million now. We’ll see what other information we can get.