If you ever took Econ 101 in college, it’s likely that your textbook was the latest edition of Paul Samuelson’s 1948 Economics. A hardcover of that book could set you back $188. If the syllabus calls for the alternative Principles of Economics by Nicholas Gregory Mankiw, expect to pay more than $225. College textbooks haven’t been affordable for years. But a New Hampshire startup wants to change that. Should you invest in ecoText stock for textbook disruption?
Well, what is ecoText? The startup bills itself as a means to deliver digital textbooks and eliminate out-of-pocket costs students pay to attend college. Perhaps more helpful to know is that it compares its business model to Spotify (NYSE:SPOT). But instead of hot music, ecoText is creating a better ecosystem to help universities and students access required reading.
The diverse team of founders at ecoText is now seeking to raise $255,000 on the Netcapital funding platform. There is a minimum to invest in ecoText stock of $99, on a $2.6 million valuation. The startup has already blown past its $10,000 minimum raise.
We all know textbooks are expensive, so let’s see what ecoText is all about.
Big Targets
The prices of college textbooks have increased 135% since 2001, while the overall consumer price index is up 46% in the same period. There are some 20 million undergraduate students in the United States, with many more expected in the coming years as new jobs require new skills.
All told, the higher education textbook market is worth about $14 billion.
Pearson (NYSE:PSO) had a 42.7% share of the market by revenue in 2018, Cengage Learning (OTCMKTS:CNGO) had 21.8% and McGraw-Hill Education had 15.9%. Cengage and McGraw-Hill abandoned a planned merger earlier this year in response to antitrust concerns.
An estimated 2.9 million students used free digital textbooks from OpenStax last year. Other university-backed free textbook efforts include the University of Minnesota’s Open Textbook Library and the Massachusetts Institute of Technology’s Open CourseWare project.
Meanwhile, e-book usage accounts for only about 6% of the demand.
Regardless of how America’s high schools operate over the new few years — remote or in-classroom — that market is also ripe for opportunity for ecoText.
Designed by Students, for Students
So how is ecoText so disruptive? The platform goes far beyond an e-book, according to the company’s pitch material. Through its application, students and instructors collaborate in what seems to be a dynamic, interactive textbook. Have a question for the professor? Post it live from the text’s source. Have notes that you want to share? Do so in real time in the digitized margins.
All of it is built around Open Educational Resources, a global effort to create freely accessible, openly licensed text, media and other digital assets. OER emerged almost 20 years ago from UNESCO’s 2002 form on open courseware and the MIT Open CourseWare initiative.
Out of these there has been an explosion of valuable, usable content suitable for college-level learning. The challenge is bringing it together in a single useful tool.
ecoText Is Expanding the Textbook Catalog
With that in mind, ecoText is assembling paid licenses for materials and organizing access across three business models.
The freemium model offers students and faculty limited access to its catalog of open-resource titles, with the obligatory advertising support. A paid premium option gives students a flat-rate subscription for a semester that adds features and titles. Strategic partnerships and alliances are targeted at institutions — college departments, libraries or entire universities — that can provide all their students with premium accounts.
The company will add a minimal margin to every digital license sold through the platform.
Of course, there’s a data and analytics piece of this story. ecoText makes much of the potential to share insights on student’s engagement with materials — information that could be a huge benefit to content owners as well as the schools.
The platform currently has 450 users from several dozen colleges and universities. It is gearing up for an expanded paid pilot in the coming months. Students using the platform without departmental or university participation will get access all of the platforms features, while only needing to buy the digital books that they need.
Why Invest in ecoText Stock?
Beyond the obvious potential to disrupt the college textbook market and help deliver a solution that will reduce the cost of higher education, there’s an environmental rationale behind choosing to invest in ecoText stock.
Simply put, online textbooks are natural-resource friendly. Bytes don’t require commercial lumbering. The Netcapital pitch highlights the effect that ecoText use could have on the ecological footprint of a medium-sized school. ecoText claims the environmental impact equates to saving a forest the size of Fenway Park. On the other end of the textbook lifecycle, it also expects to make a dent in the 2% of all solid waste comprised by discarded textbooks.
As a parent, I’d love to have a hand in driving down the total cost of my kids’ education with an investment in a disruptive technology.
Robert Lakin is a veteran financial writer and editor, following fintech, agtech and property tech startups. He was previously emerging markets editor for Bloomberg News in Tel Aviv. He is a contributor to the Powered by Battery blog. Robert does not own any of the aforementioned securities.
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2) Risk of fraudulent activity
3) Lack of liquidity
4) Economic downturns
5) Dearth of investor education
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