From San Diego to Boston: ValoreBooks CEO on SimpleTuition Deal
Back in August, I talked with entrepreneur Jonny Simkin about the sale of HubEdu, his San Diego online college textbook and retailing platform, to San Mateo, CA-based Rafter. Last week, Boston-based SimpleTuition said it had acquired ValoreBooks, another San Diego Web startup that enables students to order more than 18 million titles online.
Financial terms were not disclosed. But I recently talked with ValoreBooks founder Bobby Brannigan, who was among the seven ValoreBooks employees who left San Diego’s perennially mild climate in time to watch the season change in Boston, and I was struck by similarities to the Rafter-HubEdu deal.
Both SimpleTuition and Rafter made their respective acquisitions as part of an expansion strategy intended to reposition each company with a broader offering of products and services for college-age students.
In its statement last week, SimpleTuition said the acquisition of ValoreBooks follows a series of in-house initiatives intended to continue the company’s expansion beyond its initial focus on helping prospective students compare student loans and related financial aid. The company now offers Web-based tools that enable students to also repay their student loans, create an online checking account, and get discount rewards for certain online purchases.
Combined, SimpleTuition and ValoreBooks expect to see more than 10 million unique visitors on their website by the end of 2012.
While SimpleTuition did not announce the ValoreBooks deal until last week, Brannigan told me the deal closed before Labor Day. Just a few days earlier, SimpleTuition closed on $5 million in venture financing through Horizon Technology Finance of Farmington CT. The Boston Globe’s Scott Kirsner reports that SimpleTuition attained profitability last year, and has raised a total of roughly $18 million from Boston’s Atlas Venture and Flybridge Capital Partners. (Another Boston firm, North Hill Ventures, invested in earlier rounds.)
Rafter has raised more capital, perhaps because a Northern California rival, Santa Clara, CA-based Chegg, has raised more than $150 million under a fast-growth strategy fueled by the likes of Kleiner Perkins Caufield & Byers. After raising $40 million from investors in a Series C round last year, the company founded as BookRenter rebranded itself as Rafter and expanded its operations beyond textbooks to create a Web-based technology platform designed to source and manage course materials. As I reported previously, Rafter has raised at least $56 million in venture capital.
Another similarity, of course, is that both of the acquired companies were early stage Web ventures based in San Diego—and both left town as part of their respective deals.
In a phone interview from his new office in Boston, Brannigan tells me he started ValoreBooks a decade ago near Buffalo, NY, at the State University of New York, Fredonia, with several teammates from the Blue Devils hockey team. (Brannigan’s Fredonia is not to be confused with the fictional Freedonia of the Marx Brothers’ movie “Duck Soup,” but imagine what Groucho could have done with this startup scenario.)
Brannigan played left wing on the SUNY Fredonia hockey team all four years, and was a junior when he started the online textbook business. His wing man on the ice, right winger Scott Goergen, also was a co-founder “and my wing man at the company,” Brannigan said. They decided to move their company to San Diego in 2008, after the state established what he called “the Amazon tax,” requiring online retailers in New York to pay sales tax on shipments to state residents.
“We looked at Silicon Valley and San Francisco; Austin, Texas, Florida, and some other areas, and we found that San Diego would be a very good area for us,” Brannigan said. “It’s a very innovative place and cheaper than Silicon Valley or San Francisco.”
Brannigan said San Diego turned out to have what he described as a welcoming and “very, very open community” of Web startups. “I met people who immediately introduced me to everyone in their network,” Brannigan said. “In New York, everybody tries to protect their network from outsiders.”
Brannigan added that he was taken under Neil Senturia’s wing at San Diego’s Blackbird Ventures, which has an office in La Jolla Shores.
“We didn’t get uptake on equity investors, but Neil Senturia supported us through lines of credit,” and helped mentor the ValoreBooks CEO. Brannigan said he also became friends with HubEdu’s Simkin. “Jonny’s also a hockey player and he already was working in the same building as Neil Senturia,” Brannigan said.
Small world, huh?