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Textbook rental company goes beyond rentals with acquisition, further evolving in education space
Online textbook rental site Chegg.com announced Wednesday that it has acquired Cramster, a homework help site for high school and college students. Financial details of the deal were not disclosed.
Founded in 2002 and headquartered in Pasadena, Calif., Cramster has more than one million members, most of which (I presume) are non-paying users. (We've contacted the company for specific numbers.)
The default for registering users, a free account on Cramster lets one look up solutions to odd-numbered questions in textbooks (somewhat useless since many textbooks already have these solutions in the actual book). Free users that want an answer to a specific question quickly must either pay a one-time fee of $4.99 for a response in less than eight hours or $1.99 for a response in less than 24 hours. Or else they pay nothing and wait for at most 48 hours.
To get more out of Cramster, users can upgrade to a “Cramster Complete” account for $12.50 per month (or $120 per year under a current promotion). Cramster Complete users receive all textbook solutions (including even-numbered problems), expert answers 24/7, and 1,250 Karma Points a month. Karma points, which users normally earn through activities like answering other user questions or inviting friends to the site, can be used to purchase rewards as humble as gift cards and as grand as 3D TVs and laptops.
Users who only want access to 24/7 expert answers pay $8.33 per month (or $80 per year under a current promotion).
Cramster in April of this year raised a $6 million Series B round of funding led by Primera Capital and in September 2008 raised a $3 million Series A round led by Shai Reshef, an Israeli entrepreneur. (In 2009, Reshef founded the University of the People, an online academic institution based in Pasadena, like Cramster.)
Comparatively, Chegg raised a monster $75 million investment in September. It’s not particularly striking for a company estimated to be making $130 million in revenue yearly.
"Chegg and Cramster share the same vision of providing students with value throughout their college experience," said Dan Rosensweig, President and CEO of Chegg. "We are always striving to offer students the very best tools to help them save time, money and get smarter, and Cramster is the natural fit to expand on our offering."
So far, there are very scant details on what the deal will entail, but we are waiting on comment from the company. No matter their response, it's clear that Chegg now has ambitions larger than just renting out textbooks to students, as Cramster has very little to do with that business.
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