A startup that appeared on ABC’s Shark Tank in March, Packback Inc., has raised $1 million in seed funding to grow its e-textbook rentals business.
On the reality TV show, Packback attained $250,000 in funding from venture capitalist Mark Cuban, one of the “sharks” (or investor-judges) and the owner of the Dallas Mavericks as well as a founder of Broadcast.com.
The remainder of the seed deal closed in July, as tensions were flaring between industry titans Amazon.com Inc. and publishers like Hachette Book Group.
As The Wall Street Journal reported this week, Hachette says Amazon is seeking more profits and market-share in the e-book business at the expense of authors, publishers and brick-and-mortar bookstores.
Mr. Cuban said that the recent e-book pricing war is actually “great for Packback,” as he believes it will drive publishers to “look for unique sources of revenue,” including what he called Packback’s “pay-per-view, 24-hour rental[s].”
The idea is that once students rent a book for about $5 a day via Packback, they’re likely to convert from buying physical, used textbooks or just taking books out of a university library, to buying more digital learning materials (including e-textbooks) online from publishers.
Besides Mr. Cuban, Packback’s seed investors include The 20 Million Minds Foundation, Howard Tullman, Mark Achler, Mark Tebbe, and Rishi Shah.
Packback competes with several e-textbook sellers and physical textbook rental services including Amazon’s Textbook Rentals store, Chegg Inc., Rafter Inc., which operates the textbook rentals website Bookrenter.com, and Kno Inc., which sells discounted e-textbooks.
So far, none of these sites has offered e-textbook rentals on a very short-term basis like Packback. They sell or rent books and e-books out by the semester instead.
Investor Howard Tullman, serial entrepreneur and CEO of the 1871 tech incubator in Chicago, said he expects the company to use the funding to build digital revenue for publishers by helping students discover “new channels for accessing educational content, including and beyond their own rentals platform.”
Like Kayak or Ridescout–apps that help travelers and commuters find the best deal on a trip to a given destination–Mr. Tullman noted that PackbackBooks.com and Packback’s apps now function as a kind of metasearch tool that can help cash-strapped students evaluate all their options for attaining course materials within their budgets.
According to co-founders Kasey Gandham (COO) and Mike Shannon (CEO), the seven-employee Chicago startup also plans to use its new funding to develop partnerships with textbook publishers in higher education; grow the catalog of books it makes available on a pay-per-use basis; and promote the Packback service on more than 100 U.S. college campuses this fall.
Packback boasts users on 80 campuses in the U.S. and about 3,000 titles for short-term rental in about 21 different popular subjects.