SilverRail Scores $40M, Wants to Be ITA (Not Kayak) of Train Travel
There’s a Boston-area travel tech company that you may have forgotten about, because it moved its management team to London a few years ago to focus on the European market. But no longer—the team is back, with a major new wad of cash.
SilverRail Technologies, based in Woburn, MA, has raised a $40 million Series C venture round led by Mithril Capital Management, the growth equity firm run by Peter Thiel and Ajay Royan. Previous investors, including Canaan Partners, Sutter Hill Ventures, and Brook Venture, also participated in the round.
It’s one of the biggest funding deals in Boston tech this year, and it brings SilverRail’s total amount raised to just over $73 million. But what’s more notable is what the company is building.
SilverRail got started in 2009, working to connect rail carriers like Amtrak (its first rail customer) to travel sellers through its online software platform. The idea was to be like a global distribution system for trains, the way companies like Amadeus and Sabre work for airlines. “In rail, none of that exists,” says SilverRail CFO James Harland. “We had to establish that from scratch.”
The company quickly focused on European rail systems—while Amtrak is a $2 billion annual market, the U.K. alone is a $16 billion rail market, Harland says. And European rail as a whole is about $80 billion.
In November, SilverRail acquired the travel-planning business of Jeppesen, a division of Boeing. That division’s technology powers more than three-quarters of all U.K. train-travel searches, according to SilverRail. Harland says that means now “we’re both the Sabre and the ITA Software piece.”
He’s referring to ITA, the Cambridge, MA-based airfare pricing and shopping company that was acquired by Google for $700 million in 2010. ITA built its business over many years by selling its software to airlines and online travel services, rather than consumers. SilverRail is hoping to follow a similar model.
“We try and do a deeper integration… for high-volume customers, rather than focus directly on consumers,” Harland says. In this way, he says, SilverRail is “more like ITA Software than Kayak.” (By contrast, most of SilverRail’s competitors, especially in Europe, tend to focus on consumers buying rail tickets.)
Could the startup’s outcome be similar to ITA as well? All Harland would say is that Google eventually owning this kind of technology “is a possibility for rail.”
In the meantime, SilverRail has grown to about 70 employees, split between Woburn, London, and a development office in Brisbane. Harland and founders Aaron Gowell (CEO) and Will Phillipson (chief product officer), among others, are based in Woburn. The company declined to share revenue growth numbers.
Harland says the focus of the next few years will be on solidifying its market in Europe and, interestingly, expanding to Asia. Japan is a $90 billion annual rail market, he says, and China, India, and Korea are all important places to be. “We’re at the conversation stage,” he says.
A primary selling point for SilverRail is that rail carriers are “really good at running trains, but they don’t do IT,” Harland says. That, plus deregulation in European long-distance rail service (which started in 2010), would seem to bode well for SilverRail. But of course it still faces big challenges as it grows.
At its Woburn office, the company is hiring in engineering and product development, Harland says—everything from Java developers to data scientists to user-interface experts. And that’s probably what this funding announcement is really about—trying to drive a new wave of recruiting.
“It’s been challenging being a quote-unquote ‘boring’ B2B technology company, to get attention and press,” Harland says. Especially being “based in the U.S., where people don’t really care about trains that much.”