BookRenter Takes In $40M, Seeks to Overtake Chegg in College Textbook Rentals

2/23/11Follow @wroush

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students at other campuses. Together with two computer-science classmates, Barceloux eventually grew that idea into BookRenter, where he’s now vice president of business development.

“These kids came out of college and said, ‘I don’t want to build a warehouse and buy books, but I still think books should be more affordable,’” says Maghsoodnia, who joined as CEO in 2009. “So the question was how do you bring technology into play, where supply and demand can be balanced computationally.”

You may be wondering why a 70-employee company that has no warehouses and no inventory needs $40 million. Most tech companies use their B and C rounds to hire more engineers or beef up sales and marketing—and BookRenter will be doing some of that. But mostly, Maghsoodnia says, the company needs the cash so that it can buy more books, thus enlarging its market. It also needs leverage to hedge against the whims of its trading partners. “Say somebody is supplying 30 percent of my volume, and one day they decide to take away 10 percent of their inventory,” says Maghsoodnia. Those may be books that BookRenter already promised to rent to students. “I have to have the cash to back up my position.”

And Maghsoodnia says BookRenter will use some of the venture cash to look beyond the era of printed textbooks, toward the inevitable day when the startup’s own rental business will be undermined by the rise of digital learning materials. “Will this go down the path of e-books, like Amazon and Kindle, or will it be more like iTunes, where you consume content in a more dispersed, snackable way?” Right now, that’s unclear, Maghsoodnia says. But with so much information stored up about individual students, the courses they’ve taken, and the books they’ve used, BookRenter is in a good position to serve as a distribution network.

“Our school partners are already asking us to bring digital content to their student bodies,” Maghsoodnia says. “They’re saying, ‘What if our class uses one rental book, one new book, and one digital—can I offer that under one account?’ Given our 560 campus partners and our mission of serving students, we are in a very interesting position to become that platform.”

Xconomy goes the extra mile to bring you in-depth startup profiles. Compare this story to:

BookRenter Raises $40 Million To Take On Chegg In Textbook Rentals (TechCrunch)
BookRenter raises $40M for textbook rentals (VentureBeat)
BookRenter Raises $40M (San Francisco Business Times)

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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