It’s not exactly a secret that Elon Musk’s dream of a Hyperloop—a high-speed vacuum that can shoot people between cities in pods at hundreds of miles per hour—is not an easy project to turn into reality.
Just how difficult of a project though, is becoming more clear every day.
Last year, Hyperloop One, a well-funded startup inspired by Musk’s vision (though not directly affiliated with Musk), threw in the towel after nearly 10 years. And, as Fortune has learned, another small, venture-funded and Musk-inspired startup called Hyperloop Transportation Technologies (HyperloopTT) has also come dangerously close to skidding into the grave.
In a letter to shareholders sent at the end of January, HyperloopTT CEO Andrés de León warned that the company was running dangerously low on cash, putting its plans to design a hyperloop prototype in Northern Italy in jeopardy.
In the letter, which was obtained by Fortune, De León pleads for an extra $5 million so the company can pay back senior debt, cover operational expenses, and pay employees who had apparently been working without pay for months.
“We urgently need funding to reach our goals and protect the value we’ve created over the last decade,” De León wrote in the letter. “We have endured months without being paid, and the company still owes several months of back salary,” he added, pointing out that C-Suite executives and employees have reduced their salaries by 10-25% in a deferment program to keep the company afloat.
De León said in the letter that HyperloopTT had until Feb. 28 to pay back $1 million it had borrowed from one of its investors in the form of senior secured debt, or risk forfeiting all of the company’s assets to the investor. It’s unclear whether HyperloopTT was able to raise this capital and pay back the investor before this deadline or not. HyperloopTT would only share with Fortune that “we have the support of our shareholders” and that its “investor situation was resolved.” He would not share any specifics or details.
“This is old news,” De León wrote in a statement about the company’s attempt to raise $5 million one month ago. “Our contract with Italy is secure and funded and the investor situation was resolved. HyperloopTT remains financially sound.”
Two weeks ago, HyperloopTT said in a press release that it was leaving its R&D facility in Toulouse, France, and would open offices outside of Venice, Italy, over the next six months. The company did not specify in the release whether this move had to do with the company’s problems paying rent and salaries earlier this year. De León said in a statement to Fortune that the move was “part of our strategy for the development of our project there.”
HyperloopTT, along with other companies involved in the potential Italy project, signed a contract in January with an Italian regional highway operator. This contract gave HyperloopTT and other companies €4 million to conduct a study into the feasibility of a 10-kilometer prototype between the cities of Venice-Mestre and Padua in Northern Italy (about €1.6 million of which will go to HyperloopTT, according to the letter). The highway operator, which is commissioning the study, is not required to move forward with the project upon completion of the study.
De León appeared to be referring to the study and the €1.6 million payment when he wrote in the letter to shareholders that HyperloopTT was “a revenue-generating company with a commercial hyperloop project.”
HyperloopTT was one of the first companies to emerge after Musk published a 58-page whitepaper in 2013 that detailed his idea for tubes transporting people at airplane-like speeds in capsules underground. The company attempted to go public via a SPAC merger in 2022, though those efforts were dropped.
Musk wants to eventually build a Hyperloop system with his own tunneling startup, the Boring Company, as Fortune has previously reported. But so far he has only completed approximately 2.4 miles of operational tunnels, and they are currently being used to transport people around in Teslas underground. There have been serious safety issues while building them underground.
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