Packback, the Chicago-based platform for renting e-textbooks on demand, on Tuesday announced a $1 million seed round from a group of more than 20 angel investors. The total includes a $250,000 investment the company earned from “Shark Tank” star and investor Mark Cuban when co-founders Mike Shannon and Kasey Gandham appeared on the show in March.
Shannon and Gandham founded Packback while students at Illinois State University in 2012. Early on, they reached out to Chicago entrepreneurs and investors they admired for advice — a strategy that finally paid off.
“It was really a relationship-developing process,” Shannon said. “Our advisors evolved into investors.”
Shannon said the team originally set out to raise $750,000 but, seeing more interested investors, raised more. Investors include 1871 CEO Howard Tullman, Math Venture Partners managing director Mark Achler and University of Chicago Booth professor of entrepreneurship Mark Tebbe.
The funding has enabled Packback to build out its team, putting particular emphasis on development. That includes the hiring of Steven Maguire as head of engineering. Maguire came from TrainSignal, which PluralSight recently acquired for more than $20 million.
The company said it will focus on building an “enriched” experience for students, which may involve analyzing reading behaviors and delivering supplementary publisher content within the Packback platform.
Packback now has seven full-time employees, plus six interns and part-timers working with the company this summer. To accommodate the growing team, Packback moved into ContextMedia’s new offices at 330 N. Wabash Ave. about a month ago. There, Shannon said, his team takes advantage of more open space while he and Gandham get access to ContextMedia’s executive team — CEO Rishi Shah, chief strategy officer Shradha Agarwal, CFO Jim Demas and COO Brad Purdy, all Packback investors.
“It’s a huge blessing for us,” Shannon said. “We can walk over to Rishi or Shradha and ask them, ‘Have you encountered a situation like this? How did you handle it?'"
The investment is also powering a beefed-up marketing effort that involves partnering with commission-based campus "ambassadors" at universities across the country. Shannon said he expects the program will have 200 ambassadors by the start of the coming school year. Packback now has a full-time employee overseeing the ambassador program.
Shannon said Packback has over 24,000 users at more than 100 U.S. campuses. Through seven publisher deals for the coming school year, he said, those users will have access to more than 3,000 digital textbook titles. Original partners McGraw Hill, Sage Publications and the Taylor and Francis Group are expanding their contracts, Shannon said.
On-demand e-textbook rentals remain Packback’s focus, but the platform now shows students where on the Web they can get the best deal on a given title — digital or not. Shannon said Packback earns affiliate commissions for the sales it drives to partner sites.
Copyright © 2014, Chicago Tribune