Chegg, an online college book rental company, has closed another round of funding, getting $75 million from a Hong Kong investment company, Ace Limited. The company has now raised $219 million in total in five rounds of financing.Chegg offers text book rentals online for students looking to save on their college books which can be quite expensive.
When it launched its rental service, in 2007, text books for college were available from a small number of sources and most ended up either buying or renting them from the college bookstore.
This 'soft' monopoly kept prices up since there was no real competition either locally or nationwide. Chegg challenged that by buying text books in bulk and setting up a streamlined management and storage system, part Amazon part Netflix.
Selling and renting college textbooks is a $10 billion a year business in the US. The company says it offers its services to about 7,000 colleges and universities in the US.
There is now some competition in the online text-book renting business, but it's nowhere near the scale Chegg is at. The well-known bookstore chain Barnes & Noble is testing a similar online service, though it is only available to a small number of colleges at this point.
Chegg has raised an impressive amount of money since its business needs a substantial amount of capital for day-to-day operations. The logistics and storing of the number of books Chegg rents require a lot of money.
Chegg raised $57 million in its previous funding round, about a year ago, and has raised $144 million ahead of the latest round.
The company is also positioning itself as a 'green' alternative. Not only does it save quite a few trees, since new books don't have to be published every year, Chegg is actually running a campaign to plant a tree for each rental. To date, it says, 1.5 million trees have been planted on its behalf.