As students head back to school this fall, one of the biggest costs they face is the purchase of textbooks.
Textbooks cost the average four-year college student as much as $898 per academic year, which adds up to more than a quarter of the cost of tuition, according to a recent government study. And the price of those heavy books is rising. Textbook costs over the past two decades have grown at twice the rate of inflation, studies show.
But a handful of tech tartups are looking to revolutionize the way school books are bought and venture capitalists are getting in on the action.
The most recent example is Akademos, which raised $2.5 million in a Series A investment round from Kohlberg Ventures. The Norwalk, Conn.-based company is looking to partner with academic institutions to help them transition away from brick and mortar bookstores to online marketplaces.
The company’s system, called TextbookX, allows universities to brand an online bookstore with their collegiate logo, upload reading lists for specific classes and manage financial aid vouchers.
Another tech startup is targeting publishers to make their products smarter and more targeted to student needs. New York-based Knewton offers GMAT and LSAT classes to students online. Its back-end software applies intelligent algorithms to “learn” what a student knows and doesn’t know to better help them spend the most effort working on what they have the biggest problems with.
Knewton has raised $8.5 million from VCs since 2008 from Accel Partners, Bessemer Venture Partners, First Round Capital and individual investors, such as Reid Hoffman and Ron Conway. The company says it plans to tackle other subjects and facets of the textbook business in the future.
Flat World Knowledge, a Nyack, N.Y.-based startup, has a different vision for the textbook business. It offers education books for free on its website and charges students who want to download the book, have it printed and sent to them or to have it read to them via an MP3-formatted audio file. The startup shares a percentage of its earnings with the textbook authors who offer their works for free. It raised $8 million from Greenhill SAVP, Valhalla Partners and High Peaks Venture Partners in February.
Perhaps the most well-funded startup trying to revolutionize the textbook industry is Chegg Inc., which rents textbooks to students for a term. Mankiw’s “Principles” costs $9.99 for a semester. The Santa Clara, Calif.-based company raised a $25 million Series C round in December from Kleiner Perkins Caufield & Byers, Foundation Capital and Gabriel Venture Partners that brought its total fund-raising to $33.3 million.