Earlier this month college textbook rental company Chegg raised $112M as part of a combined Series D and debt round, bringing the total raised by the company to a massive $144M. Competitor BookRenter will tomorrow announce a Series A round of $6M, raised from Storm Ventures and Adams Capital Management. BookRenter has only raised a fraction of the capital of their competitor Chegg, but the company claims that it is growing at over 300 percent, year-over-year. The companies are loading their war-chests to fight over a fiercely competitive college textbook rental market.
Both Chegg and BookRenter work on a similar principal – 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. Textbooks are expensive, and often have a limited lifespan – these attributes, combined with a market of poor students looking to save a few dollars, have resulted in the textbook rental market exploding in recent years.
BookRenter claims a competitive advantage over Chegg and others by offering more flexible loan schedules and faster delivery (they offer next-day delivery on many titles, and use UPS). The system is simple: a student searches for a book 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.
BookRenter was founded in 2008, and is based in Campbell, California. The new round of funding to be announced tomorrow is the first significant round of financing that the company has raised. There are not many points in the market where BookRenter is able to squeeze out significant differentiation – for college students, it comes down to size of catalog, delivery speed and price. Chegg has raised enough capital to fund a large-scale, low-margin market grab. Despite being a recent entrant in the market and having a very significant and heavily-capitalized competitor in Chegg, BookRenter has managed to sprout up and see strong growth. One of these companies is likely to become the Netflix of textbook rentals.