It is with great sadness that we must announce the death of a dream. The death of european teleportation. It’s moving on to a better world.
Midnight Trains died today, surrounded by family and friends.
We have done everything in our power to succeed in making the shared dream of a 21st century night train come true. It was a beautiful, worthwhile night train that had the power to make sustainable travel between Europe’s major cities a reality.
Today is the end of an ambitious project launched by a bold trio. For four years, we’ve put all our energy into reinventing the night train to make it a mode of transport that’s in tune with our times, able to compete with medium-haul aviation and offers a desirable alternative to all those who wish to continue travelling, without trashing the planet.
It was a crazy gamble, but not that crazy. Over the last decade, european railway infrastructures have gradually opened up to all public or private operators wishing to run trains. Before then, it was only national operators (SNCF, RENFE, DB, etc.) who did so. The regulatory framework opened its arms to us. Some european achievements — Italo, Flix train, Regiojet, and Léo express — reinforced our desire to enter this market.
And this was all despite warnings from experts from the very start. “Legally, the market is open, but it’s dominated by legacy players,” they said. “You’ll never be able to find second-hand material because the historical players prefer to scrap it, rather than sell it to new entrants,” they said. “No builder will agree to work with a small company like yours,” they said. “No one will finance your rolling stock because the unsubsidised passenger market is considered risky,” they said. “It’s hellish to work with infrastructure managers who are under the thumb of the historic national operators,” they said. “It could work elsewhere in Europe, but the French railway belongs to the SNCF and public actors protect it,” they said. And those are just some of the things we heard.
We’re well aware of all these risks. But we measured them and evaluated them. Building on other agenda-setting, successful experiences in other sectors, we saw a path that was tentative, but realistic, to achieve the end goal. We wanted to find solutions to this complicated equation rather than stopping at the hurdles, at first glance, and deciding they couldn’t be overcome.
It all started with fundraising which enabled us to develop the project. A fundraising effort that we carried out with more than forty business angels who were just as passionate about the project as us. Together, we defined the major goals needed to take the next step. It took us two years to achieve them. They were two difficult years during which we learned to think, speak and live railways, which enabled us to create relationships of trust with all the major players in the sector.
It was also at the end of those first two years that Nicolas Bargelès, our wonderful, daring director of operations and new partner, joined us.
With an entire founding team, the trains ready to be built (with the technical specifications and design carried out), a carefully selected manufacturer and an English leaser on our side to finance the first two trains, we then tackled our second fundraising, which would allow us to launch, at a minimum, our first Paris-Milan-Venice line.
And this is where we fell down.
We could spend hours telling you the whole story, but it's all in the archive: Confidences. We will try to take stock here, with the hindsight and foresight necessary for this type of exercise.
1. We believed that our vision would be shared more widely by financiers
We built our conviction around a strong hypothesis that’s still fair in our eyes: there would be no ‘clean’ aeroplane before the end of the century and the only way to decarbonise medium-haul travel is the night train. However, the night train in its current form, and for the next decade, won’t live up to instigating the shift that’s required.
We had the impression that this vision would be shared by as many people as possible. On this point, we were correct and as soon as the creation of our company was announced, thousands of people joined us around this vision. However, we hadn’t taken into account two killer factors, which are below.
Rail isn’t a “mega trend” and night trains even less so:
It’s possible, in our time, to finance and launch large-scale industrial projects with the objective of protecting the environment. However, these sectors are restricted by public authorities. This was the case a few years ago for the energy sector, then for food and agriculture. Off the beaten track, it’s almost impossible to get there. We should have realised quickly that the railway sector wasn’t ready to open up to new private entrants. The money and energy of public authorities are concentrated on energy and in our case on clean aircraft more than on the uses or improving what already exists.
The reality of opening the market to competition:
The channels are open, but in reality, the rail market has mainly opened up to itself. This market was organised by the public authorities for their own historical operators, not to really create new players. Each european country can see its neighbours land on its territory and vice versa. These operators have the goods (rolling stock) and the means (financing and public guarantee bodies) to deploy. We knew this, but thought it would be possible to change the rules, or that they would evolve on their own. It was a poor reading on our part: we listened too closely to the claims, but didn’t look enough at the actions of the French and european public authorities.
2. Financial players in Europe aren’t in line with a project like Midnight, its risk profile, maturity, ambition and characteristics
On the one hand, seed funds (venture capitalists) don’t invest in long-term projects with assets to operate. It’s a shame, because they know how to support entrepreneurs in their first years.
On the other hand, infrastructure funds don’t invest in young companies and have very little interest in rail. It’s a shame, because they know how to invest in long-term companies with significant assets under management.
And finally, growth funds invest in growth and rarely take the commercial risk of starting a business. It’s a shame because some of them have a VC culture and others the culture of infrastructure.
The remit was tight, we had few obvious targets and lots of elements to synchronise. With bad timing, bad tempo, and a lack of success, we failed to create the momentum we needed. However, fundraising is the key to it all.
3. Not sufficiently funded from the start, we lacked velocity and didn’t reach the necessary maturity
We should have stopped when we failed to raise the EUR 5 million needed in our first round. We thought at that time that with the financial efforts and energy of the founders, we could move mountains. Unfortunately, we weren’t strong enough to tackle this extraordinary, unprecedented second round of funding. With a total of EUR1.3M, even without paying ourselves, it was impossible to align additional subjects with the specification of our trains, the partnership with a manufacturer, the specification of our IS, to find a director of operations and community building.
With more cash, we could have:
We have always made measured choices, as good fathers, and perhaps we should have thought bigger, faster, or stopped sooner.
So yes, the railway sector is quite exclusive, complex and rigid, but we were well received and fell in love with this extraordinary world that’s been built with passion by enthusiasts. We warmly and kindly thank everyone we had the chance to meet and everyone we worked with.
We really hope that in the coming years, the European Commission, the governments of the Member States, as well as the organising authorities, will build a railway capable of welcoming new innovative companies. We hope that this dynamic will allow investment funds to take an interest in rail, so that other entrepreneurs can succeed in creating new uses and improving the train travel experience. To make this means of transport beloved as a significant alternative to aviation and automobiles.
On a more personal note, we regret having proved right some of the sceptics and cynics that we encountered in the public and private sector during the past four years. But above all we regret having generated so much hope and desire among the general public, among you, the readers, who have been following our progress. We also regret not having succeeded in bringing to life a product that we dreamed of so much. Dreams are meant to be realised, and we’ve failed to make this one a reality.
Let's keep dreaming of Midnight Trains. One day, other entrepreneurs may succeed where we failed. And so much the better, the planet needs it. If certain entrepreneurs wish to save time and start from a healthy, established basis to launch a similar project, we’re open to discussion for the transfer of our assets.
Thank you all for sharing our dream and believing in us to make it come true.
Goodnight all.
Adrien, Romain and Nicolas
Our thanks go out to ~
Our strategic committee: Odile Fagot, Jean-Philippe Thieulin, Patrice Haddad, Franck Gervais, Thierry Roussel and Cyril Aouizerate, as well as our other investors. Yorgo Tloupas, Alexis Tsé, Emmanuelle Baudet and all the team at Yorgo & Co. Julien d’Hoker, Patricia Bastard and all the team at Yellow Window. Luigi Martinelli of Railtarget. Théo Pourriat and Bertrand Grébaut of Stone and Septime. Victor Le Masne. All the teams at Gottengreen and Apex Rail. Marie Ekeland, Guillaume Bregeras, Charly Berthet and all the team at 2050. Bastien Grandet and all the team at Ademe Investissement. Hervé Marro, Maria Galeriu, Alexis Maillard, Jean-Baptiste Bonaventure, Megan Carnegie, Huw Oliver, William Polet, Claire Hennebel, Maxime Blanc-Strauss, John Frame, Pauline Alessandra, all the team at FPS, all the teams at SNCF Réseau, Intercités, Gares et Connexions, Masteris, Xavier Sobler, Philippe Aloyol, Nicolas Lignier, and Adèle de Montmarin.
Our families and our friends, and everyone who recognizes themselves.
