College textbook publisher Flat World Knowledge raised $8 million in venture capital to broaden its business of selling printed versions of materials that it makes available online for free, says a Reuters report.
The Nyack, New York, US-based company was launched last year by textbook publishing executives Jeff Shelstad and Eric Frank.
Flat World offers students online books for free and the option of paying for a printed copy, which typically costs less than a comparable textbook from a college store. The textbook Principles of Microeconomics, for example, costs $30 for a black-and-white copy and $60 for one in colour.
"The idea here is the cost of textbooks has gone up dramatically over the last 10 years," says Hooks Johnston, general partner at venture firm Valhalla Partners, the largest investor in the startup. Other VC investors include Greenhill SAVP and High Peaks Venture Partners.
"For a community college student, 40 percent of the cost of attending school is the textbook cost," Johnston adds.
The impact of escalating textbook prices has been documented by regulators, educational institutions and student groups. Today, the typical student spends more than $900 on college books a year, according to the student-led advocacy group Make Textbooks Affordable. College textbook prices, meanwhile, have increased at twice the rate of inflation since the mid-1980s, according to a report by the Government Accountability Office (GAO), published in 2005.
Publishers are also releasing new editions more frequently, partly in response to the growth of the used textbook market. The GAO found that the most widely purchased textbooks on college campuses have new editions published every three years, on average.
Johnston says he was drawn to invest in the startup Flat World in part because of the huge market for college textbooks. Nationwide, the total college textbook and course materials market was estimated at $5.5 billion for the 2006-2007 academic years, according to the National Association of College Stores.
Flat World is one of several venture-funded startups in the educational publishing space seeking to provide a lower-cost method for delivering textbooks to college students.
In addition to Flat World, at least two other textbook-focused businesses have raised funding in the past year. Chegg, a textbook rental website, raised $33.3 million in 2007 and 2008 from Kleiner Perkins Caufield & Byers, Foundation Capital, Gabriel Venture Partners and Maples Management. Better World Books, which collects and sells used books and donates some profits to literacy causes, raised $4 million last spring from Good Capital and individual investors.
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