Textbook renter Chegg raises $75 million

Ronny Kerr · September 27, 2010 · Short URL: https://vator.tv/n/1210

As textbook rental market heats up exponentially, Chegg picks up an Asian investor

CheggOnline textbook rental service Chegg.com has secured a new $75 million investment from Asia-based firm Ace Limited, according to multiple sources.

Chegg, a service that could prove as disruptive to textbook sales as Netflix was to brick-and-mortar movie rental shops like Blockbuster, rents out textbooks for cheap to cash-strapped college students.

The Santa Clara, CA-based company first foreshadowed how massive and disruptive the textbook rental industry would be when it managed to raise a whopping $112 million in funding last November.

Ace Limited would be joining the ranks of prominent investors like Insight Venture Partners and Kleiner Perkins Caufield & Byers, which, with the help of a few other firms, have raised $144 million in total for Chegg. This latest investment, when confirmed, will bring Chegg’s total funding to $219 million.

We've contacted Chegg to confirm the deal, but have not yet received reply. We are also eager to find out whether having an Asian investor on board could signify the start of a broad international expansion for the rapidly growing company.

Furthermore, while this could be a bit speculative, it makes some sense for a textbook rental service to seek out potential investors in the autumn months, when the company likely sees its greatest activity from students returning to classes. On top of that, rentals this year undoubtedly topped last year’s numbers as more and more students learn of renting textbooks as a cheap alternative to buying books.

We published estimates in June that Chegg would start generating around $130 million in 2010 for that very reason. If well-founded conjectures aren’t convincing enough, take a look at rival textbook rental company, BookRenter, which saw a 725% spike in revenue since September 2009.

While companies like Chegg and BookRenter leave traditional textbook sales businesses behind, however, they should start looking to how they will survive the impending move to digital textbooks.

Osman Rashid, the founding CEO of Chegg, is already preparing for that move with his newest startup, Kno, a company looking to the future with elegantly-designed digital textbooks that will have to face competition as wide-ranging as Apple with its sleek iPad and Amazon with its market-dominating Kindle.

For the time being, though, Chegg is probably raking in the cash.

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BookRenter launched in 2008 and is dedicated to making education more affordable by allowing students to rent textbooks for up to 75% off the retail price. BookRenter's innovative pricing and operating systems provide students with the best price, highest quality books, and most flexible rental experience available today. Currently carrying over 3 million titles and serving thousands of students on over 5,000 U.S. campuses, BookRenter is one of the fastest growing startups in Silicon Valley, growing at over 400% each year. BookRenter, with offices in San Mateo, California, is a private company that is funded by prominent Silicon Valley venture capital firms. To learn more about how to use BookRenter for all of your textbook rental needs, please visit http://www.bookrenter.com.