Exclusive: Chegg Raises $75 Million in Additional Funding from Asian Firm
Chegg, the online textbook rental service, has raised another $75 million from Asia-based Ace Limited, according to sources.
Ace seems to be nonexistent on the Internet, although sources said it is a Hong Kong-based investment firm.
The round comes after a huge Series D investment in late 2009, which already brought Chegg’s funding to a whopping $144 million.
Venture firms, such as Kleiner Perkins, Foundation Capital, Insight Venture Partners and others have presumably handed over that money in hopes of big returns.
And, of course, the inevitable IPO for the Silicon Valley start-up.
That’s because Chegg has become the front-runner in the increasingly competitive online textbook rental space as it seeks to disrupt the $10 billion college textbook business.
Chegg got its start in 2005 at Iowa State University as a classified rental service, where books were the dominant item, but evolved its business to focus on actually doing the textbook rentals.
The company’s unusual name, Chegg, is a mashup of “chicken and egg,” and its model is similar to that of innovative video rental outfit Netflix (NFLX).
Chegg now serves close to 7,000 schools across the U.S., with 120 employees in Silicon Valley and more at a warehouse operation in Louisville, Ky.
Typically, a rental costs a fraction of what buying a book outright does. It is ordered online and then sent to a renter, who then returns it.
There is, of course, lots of competition.
The Barnes & Noble (BKS) College division recently began testing a textbook rental program, for example, and is rolling it out to 25 U.S. colleges. And BookRenter is a smaller rival.
In a bid to expand its offerings beyond books, Chegg recently acquired CourseRank, a Mountain View, Calif., start-up that 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.”
Here is a video interview I did with Chegg CEO Dan Rosensweig recently at Chegg’s Santa Clara, Calif., HQ: