Chegg Gets $75M, Extra Padding for Powerful Growth
Online textbook rental company Chegg has raised another $75 million from a Hong Kong-based company called Ace Limited, reports Kara Swisher All Things D. Chegg started in 2005 at the Iowa State University as a classified rental service which, later on, decided to do textbook rentals. As to the slightly odd name, it is a quirky combination of chicken and egg.
Last year, Chegg had gotten its series D round of funding from venture firms including Kleiner Perkins, Foundation Capital and Insight Venture Partners, amounting to $144 million. These companies are hoping for some big returns as Chegg seeks to outdo the $10-billion college textbook business.
Compared to actually buying textbooks, Chegg services does not cost much. The textbooks can be ordered online, then sent to the renter who returns it after.
As innovative as the company is and the bigger the targeted market it has, there exists competitors and perhaps, there will be more. The Barnes and Noble College has launched a textbook rental program serving 20 school in the US. Also, there is BookRenter which does not impose itself as that of a big threat.
But Chegg’s consistent and cash-heavy capital will give it a massive cushion for growth and operations. John Furrier speaks to Chegg’s competitive advantage, saying “Chegg is taking some cash while they are hot and it also takes the pressure off them to go public. This gives Dan Rosenwig time to get the operations in rock solid order.
“According to my sources Chegg is doing great and haven’t even pushed the envelope on the revenue side. The additional funding will allow them to move on their own timetable to get to massive scale. Overall a good move for Chegg.”
Chegg also acquired CourseRank, a start-up in Mountain View, California which helps students “share their course schedule, take classes with their friends, read and write reviews on classes and professors as well as find out how professors grade.” The company seeks to expand beyond textbook rentals. See here for a video Kara Swisher did with Rosenweig earlier this year.
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