SilverRail, $9M in Tow, Goes After International Railway Market in Online Travel

8/3/10Follow @gthuang

It’s about time someone cracked the online travel search-and-ticketing market for trains. Hotels and airlines are pretty crowded sectors, especially in the U.S., but railway systems might hold some promise—at least abroad.

Enter SilverRail Technologies, a young company based in the Boston and London areas. Founded a year ago by CEO Aaron Gowell, formerly of National Leisure Group and a founding member of General Catalyst Partners, SilverRail has raised $9 million in Series A funding from investors including Sutter Hill Ventures, GrandBanks Capital, PAR Capital, and Brook Ventures. The news was first reported by the Boston Business Journal and then by Tnooz. (General Catalyst, which has expertise and investments in a number of travel companies, apparently did not invest in SilverRail.) The startup did not respond to my request for comment last month.

According to Tnooz, SilverRail “works with railways as a technology partner and provides access to any travel seller through a single connection.” The company has recently rolled out a beta version of a consumer rail-ticketing site, Quno.com, in the U.K.

Meanwhile, the BBJ report states that SilverRail “has come out of stealth mode, announcing its plans to be the ITA Software of rail travel.” However, a source close to Cambridge, MA-based ITA Software told me he doesn’t think anything ITA works on “is relevant to this.” (At the beginning of July, ITA announced it is getting bought by Google for $700 million, so perhaps the company is just a handy reference point.)

Others I’ve talked to in the online travel industry wondered whether a big market for rail travel would ever really develop in the U.S. But one senior travel analyst thinks SilverRail is on the right track—and it’s all about the international market first.

“SilverRail has a bright future,” said Henry Harteveldt of Forrester Research, in an e-mail message. “Long-distance rail in Europe is about to be deregulated, meaning that there will be even greater competition. European rail companies will need to become more creative and aggressive in how and what they sell to consumers. The rail companies will also need to examine how they sell to and through traditional travel agencies, which are stronger in Europe than the U.S. If the rail lines decide they want to reduce their reliance on [Global Distribution System] companies, like Amadeus, that may create a new opportunity for SilverRail.”

It sounds like tapping the U.S. railway market will be more difficult, but could still be doable. “Though it won’t happen for several years, there will be more high-speed rail service in the U.S.,” Harteveldt said. “As that happens along with airlines reducing short-haul flights, inevitably higher gas prices, and increased focus by travelers of the environmental impact of the trips they take, rail will benefit. If SilverRail has viable solutions for Amtrak and other U.S. rail operators, they stand to benefit.” He added that “Asia represents another market that SilverRail may be able to serve,” citing China, Japan, and India specifically.

So what are the company’s prospects at this early juncture? “SilverRail certainly has an adequate amount of money, and their top execs are extremely solid business people,” Harteveldt said. “Everything is pointed in the right direction, at least for now.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com or call him at 617-252-7323. Follow @gthuang

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