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Published 04 April 2013 12:18, Updated 05 April 2013 10:18
The Zookal team: From the left: Ahmed Haider, Vicky Lay, Chris Zaharia and Jonathon Tse Photo: Ben Rushton
Sydney-based textbook rental company Zookal has disputed claims from some Silicon Valley investors that Australian companies need to set up in the United States before they have a hope of obtaining funding.
Chief executive Ahmed Haider and his team spent three weeks in Silicon Valley at the end of last year, and returned with $1.2 million of new funds invested in their business. The funding was raised only two weeks into the trip.
“After pitching to Australian investors for four months and getting maybes, we successfully closed the round after just two weeks in Silicon Valley,” Haider tells BRW.
“We had a number of people we knew from last time. The Australian network is very strong – we met with them and they were supportive. But the actual funding itself didn’t come from any referrals or anyone we had a pre-existing relationship with.”
Zookal also pitched to top-tier venture capital firms like Accel Partners, Sequoia Capital and Founders Funds without any introductions.
“We booked a return ticket, we cold called, emailed, and waited outside offices,” Haider says. “Without seeming annoying, obviously”.
Zookal buys university textbooks, which can cost thousands of dollars over the duration of a course, and rents them to students for half the cost of buying them. It now has a stock of about 10,000 books and Haider says he expects annual revenue to pass $1 million within three months. The company has set up a Silicon Valley-style office in Ultimo near the University of Technology, Sydney, sporting arcade games, hammocks and massages for employees.
Haider says the fact Zookal was being mentored by Aayush Phumbhra, co-founder of US student services giant Chegg, was a plus for investors.
Zookal is facing tensions with publishers whose business models it is disrupting. The publishers are reducing bulk discounts to Zookal and accusing it of copyright infringement.
“We were quite surprised when they were saying there were issues with copyright because we had checked it off with our lawyers,” Haider says. “There’s no copyright issue in rental of textbooks. It’s more about the digital material that comes with textbooks; you’re not allowed to rent those out. Once we found that, which was a year ago, we stopped renting those out.”