Better World Books, an online retailer that resells used books and donates some of the proceeds to fund global literacy projects, has brought in its first outside investment to branch out into publishing, book rentals, and international do-gooding.
The 5-year-old company said Monday that it raised $4.5 million in its first round of financing led by Good Capital, an institutional investor that specializes in social entrepreneurship. That money included $2 million from a group of 18 private investors, whose names were undisclosed.
"Like a lot of start-ups, if we want to continue to accelerate our growth and scale, we want to invest in new business units," said David Murphy, CEO of Better World Books. Murphy said that the company plans to use the money to improve its own Web site and efforts to bring in new books. But future projects include expanding overseas, building up a young book-publishing division, and offering a book-rental service from its Web site.
"It would be like taking a Netflix approach to the text book market," he said.
Better World Books collects books from university bookstores and libraries and resells them, donating an average of 10 percent of the price of the book to nonprofit literacy groups--Books for Africa, Room to Read, World Fund, and National Center for Family Literacy. Some of the books are shipped directly to Africa. The company sells its books on its own site Betterworldbooks.com, as well as retail sites like Amazon.com and Half.com.
The company also offers carbon-neutral shipping, adding 2 cents to 5 cents onto the cost of each book to buy credits to offset the carbon used in the distribution.
Good Capital has offered Better World Books $2.5 million as one of the first investments within its Social Enterprise Expansion Fund. Kevin Jones, co-founder of Good Capital, will join the company's board.