Today Perlego announced its £3.5m venture round led by ADV. Co-investors alongside us include Simon Franks (founder of LoveFilm) and Alex Chesterman (founder of Zoopla).
In the past we all bought books but now we consume content digitally. Spotify has re-defined this consumption for music, Perlego wants to do the same for educational textbooks and professional learning.
Its platform connects consumers to publishers and enables partial ownership, and we feel this is a winning model. Consumers simply pay for what they read whilst publishers monetise content they commission. The team has already began working with the majority of the largest academic publishers and have validated their business model with a critical mass of students.
We are excited to play a small part in helping Gauthier and his team to redefine this industry in a consumer generation. Leading change within an industry can be painful, publishers are grappling with the transition from physical book sales to digital. The combined market capitalisation of the top five global academic publishers is in excess of $25bn.
These leaders need to elevate their collective minds for a moment and think about how to maximise Earnings Per Book (EPB) in this digital era. By doing so they could increase the lifetime value of their readership through second hand sales, consumer gifting and tackling piracy.
Perlego has agreements with 1400+ publishers, including 8/10 leading academic publishers. There are 200,000 e-textbooks on the platform and the team are looking for major growth in student subscriptions in the coming year. If all goes well in Europe, a move to the US, where students spend on average $1200 a year on textbooks, will be next.
Users pay a monthly subscription fee of £12 per month, with 65% going back to publishers, for full access to the platform and its content. The obvious analogy to draw is Spotify for textbooks.
We can’t wait to see what the future holds for founder Gauthier Van Malderen and his team. He commented: “Students prefer choice and flexibility over owning, and virtually every form of media have encountered this paradigm shift; music, movies, news, and even trade books! With textbook prices having risen 847% since 1972, over 3x the rate of inflation, and the ownership model for textbooks largely broken, a subscription model for textbooks just makes sense.”
“On the other side of the model, publishers are currently losing out on over 30% of the textbook market to second-hand books sales and a further 28% due to piracy. The subscription model helps publishers regain market share from these areas as well as allow them to capitalise on a large section of the market that won’t otherwise buy their book at all.”
If you’ve got a big vision for the future and would like long term, patient venture backing, please share your ambition with us. Three members of our investment team will review your opportunity and feed back within a few working days.