Chegg.com, the Netflix of the textbook rental industry, raised an unprecedented $57M in a recent round of fundraising. The exorbitant amount bucks the trend of depreciated investing and valuations by venture capitalists in a struggling economy hinting at a possible resurgence of confidence and investing.

With total investments estimated at $160M by numerous firms (including: Insight Venture Partners, Kleiner Perkins Caufield & Byers, Foundation Capital, Gabriel Venture Partners, and Primera Capital) and an established client base, Chegg.com is in an enviable position. With so much support from such prominent VCs and repeat business Chegg.com appears destined to succeed.

However, even with such support, Chegg.com still has challenges to overcome. These challenges include other textbook renting sites as well as used book purchasing sites.

A brief market search of two books yields the following prices:

Atlas of Human Anatomy by Netter

• Chegg.com – Rent – $37.49
• CampusBookRentals.com – Rent – $50.41
• Bookrenter.com – Rent – $43.03
• Amazon.com – Buy – $55.00
• Half.com – Buy – $50.00
• ValoreBooks.com – Buy – $38.59

Freakonomics by Levitt

• Chegg.com – Rent – $11.99
• CampusBookRentals.com – Rent – $15.99
• Bookrenter.com – Rent – $22.71
• Amazon.com – Buy – $4.71
• Half.com – Buy – N/A
• ValoreBooks.com – Buy – $7.00

As we can see, renting a book isn’t always the optimal solution however if one does rent, Chegg.com appears to have the price advantage. If we were to solely compare textbooks there is a good chance that cost savings would be more apparent. In this case, Freakonomics is not a textbook so the advantage Chegg.com possesses is not obvious. Even still, with competitors and alternatives looming, if customers (mostly college students) don’t realize significant savings over buying used books, Chegg.com will have to maintain exceptional customer service as well as offer additional services in order to maintain leadership.

With so many competitors and supplementary services offered online, one would have to wonder what it takes to succeed in such a crowded space. Maybe all that’s needed to succeed is another $57M.

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