A private passenger rail operator is seeking $5 million from investors through an ongoing Series A fundraising round to help launch services in a busy New England commuter corridor next year.
Boston Surface Railroad Company is on pace to open the first leg of a passenger rail line that will connect Worcester, Massachusetts and Providence, Rhode Island in 2020, according to Vincent Bono, the company’s founder. But to stay on schedule, he said, BSRC needs additional funding to pay for track upgrades, purchase additional passenger cars and support business operations.
The fundraising round began in January and will close in June, he said. Bono has self-funded the company with nearly $2.1 million since its launch in 2012. BSRC has also sold $300,000 in savings and corporate bonds and applied for a $9.5 million grant from the Federal Railroad Administration.
Bono said the company’s plan is to bring privately operated rail service to New England “gateway cities” where commuters currently suffer from congested highways and lack public transit options. Around 200,000 commuters in the region spend around 70 minutes to drive 50 miles twice a day, he said.
BSRC hopes to provide a rail service that cuts commute times by as much as 40 percent for an average fare of $11.
“The Gateway cities are essentially cities that don’t get a lot of attention from their state departments of transportation,” Bono told Infrastructure Investor. “These are cities that in the past have had a huge economic value in the region, but they’re not served well from a transportation-equity point of view.”
BSRC plans to extend passenger rail service through several more cities up to Concord, New Hampshire by 2030. The first phase, Worcester to Providence, has received approval from the federal Surface Transportation Board and from local railroad operators in host cities, according to Bono. He added that local governments in the region have been supportive as well.
Private passenger rail service has been virtually non-existent in the US for decades. However, with increasing urbanisation and governments warming to private infrastructure investment, investors are beginning to explore business opportunities in the sector.
According to Bono, BSRC’s startup will be efficient thanks to existing tracks in the region that have seen dwindling use by freight companies in recent years. The company is also purchasing refurbished cars instead of building new ones.
In contrast, a company called Virgin Trains USA in Florida missed several service deadlines last year as it attempts to rollout a high-speed rail network servicing southern Florida. Virgin Trains USA cancelled its $538 million initial public offering last week and reported revenue of $5.2 million and a net loss of more than $87 million in the first nine months of fiscal year 2018.