May 20, 2015 · 3 minutes

VC firm Founder Collective has two e-book startups, Oyster and BookBub, in its portfolio. Which would seem to be a conflict of interest, right? But while both are in the same broad space, they serve very different purposes for the electronic publishing industry. In fact, Founder Collective's backing of both seems like a savvy move in that they are backing two mutually beneficial parts of the supply chain for a single, fast growing vertical.

Oyster, an e-book site with a subscription model, offers members access to a wide array of books for a monthly fee, as well as the opportunity to buy books not available as part of its "lending" service, which was been likened to "Netflix for books." This offers a great alternative to buying e-books through Amazon or Apple; Oyster is a modern day Internet electronic book library for about $10 per month.

BookBub, which announced that it has raised $7 million in new funding today, is a growing marketing titan in the e-book space. The company, which has 5 million member worldwide, offers a free newsletter service that curates the best e-book deals available to its users based on their literary interests. The company also receives a daily list of e-books on sale or available for free from electronic book publishers both large and small.

Once subscribers opt in to the service they receive a personalized marketing email that includes offers from across the e-book spectrum -- from large corporate publishing companies to independent e-book authors. As BookBub president and co-founder described it, "Oyster is a retailer...they essentially compete with Amazon, Google, Barnes and Noble, etc. We are different, we are a discovery service. We are basically a marketing vehicle for the publishing industry."

He added, "We don't sell books, and we don't plan to. Our goal is just to help readers find the best books to read."

The $7 million in new funding, which comes from Avalon Ventures, Founder Collective, NextView Ventures, and Bloomberg Beta, will be used to help the company continue its international expansion.

The company currently operates in the U.S., the United Kingdom, Canada, and as of a few days ago, India. According to Schanker, the company plans to expand to other countries with large English-reading audiences (umm...let me guess, Australia!), and eventually start offering its product for foreign language books.

"Our strategy has been to start in countries in which there is a large English-speaking population," he said. "The reason is that it's important that we have a lot of publishers in the U.S. who want to sell their books internationally." By expanding to English-speaking countries, BookBub's partner publishers and authors can easily market their books without having to do translations. "We are taking books that are popular in the U.S. and marketing them to our international users," said Schanker. "But we are going to start offering more books that are unique to each location."

India, says Schanker, is an enormous opportunity for BookBub to rapidly expand its member base as it has the world's second largest English reading population — after the United States — and a growing appetite for e-books.

"We are very bullish on India because the e-book market there is taking off," Schanker said. Even before they launched a localized version of BookBub in India, the company had thousands of users who had signed up for subscriptions through the U.S. version of the site. "It was ideal for them because some books wouldn't be available to them, and the currency would be incorrect. There were a bunch of things that made the experience not that great, and yet, despite that, people in India were flocking to BookBub more than any other country, and we hadn't even done anything there yet."

While Oyster is a more obvious e-commerce play, I'm not sure if its model is as internationally scalable as BookBub's e-book marketing play. With the new investment, BookBub has now raised $10.8 million, compared to Oyster's $17 million.

In the electronic book vertical, it will be interesting to see which approach has more staying power.

[image via wikimedia]