Elon Musk’s dream of ultra-high speed travel through a tube came a small step closer to reality on Tuesday, when one of the companies set up to pursue the idea announced it had raised another $80m and said it was ready to show off a key part of the technology.

Mr Musk, chief executive officer of Tesla Motors and SpaceX, stirred a wave of interest in 2013 in a technology known as hyperloop — a tube from which air is pumped out to maintain a near-vacuum, theoretically making it possible for pods carrying people or freight to move at close to the speed of sound.

The idea was floated as a potential alternative to California’s plans for a high-speed rail line between San Francisco and Los Angeles. Coming from an entrepreneur who has come to be seen in some tech circles as a visionary, it attracted enough attention to trigger a race among start-ups trying to prove the technology is in fact practical.

Hyperloop Technologies, the company furthest along with its plans, said on Tuesday it had raised $80m in a second round, taking the total so far to more than $100m, with the backing of investors including GE Ventures, a unit of General Electric, and SNCF, the French national railway.

It also said it would show off the propulsion system for its planned hyperloop on Wednesday on a section of exposed track near Las Vegas, and planned to have a full-scale, three kilometre trial operating in a tube before the end of the year.

“The idea that was a glimmer in the eye of Elon Musk in 2013 will be a full-scale prototype by the end of 2016,” said Rob Lloyd, chief executive officer. “When we demonstrate the prototype, everyone will realise we can solve problems of urban congestion — we can free up land, redefine cities. It’s a big deal.”

Supporters of the hyperloop concept, including Mr Musk, maintain that the technologies needed to make it work have all been proven, and that the real challenges that need to be overcome involve business model and financing.

Hyperloop Technologies — which on Tuesday said it was changing its name to Hyperloop One — said it was working with a number of construction and transport partners around the world to study the feasibility of individual projects, and that it expected to see a wave of interest from cities and other government bodies once it had showed off a working system.

The idea that was a glimmer in the eye of Elon Musk in 2013 will be a full-scale prototype by the end of 2016

Given the huge capital investment, long-distance connections between cities — the kinds of project promoted by people like Mr Musk, given the high speeds they could theoretically reach — are unlikely to see the first attempted use of the technology.

Instead, Mr Lloyd said that connecting container ports with nearby transport hubs presented an attractive potential use, since it could free up storage space in ports and take traffic off surrounding streets. That would not require the high speeds theoretically possible in hyperloops, but would still be better than building new rail links since the systems would operate far more quietly and not raise local opposition, he added.

Hyperloop One is also aiming to carry freight rather than passengers to get around regulatory concerns about safety, but said it hopes to extend to moving people once the technology is proven.

Meanwhile, another start-up hoping to build a prototype system, Hyperloop Transport Technologies, this week announced the technology for its own propulsion system, based on using powerful magnets to levitate pods above the floor of its tube.

HTT hopes to have a working prototype of its system running by next year, said Dirk Ahlborn, chief executive. The company is looking to raise $165m to back its plan, though Mr Ahlborn said it was still in discussions with backers and couldn’t disclose any of the potential investors or other partners for its system.

“From a technology position, we’re ready to build,” said Mr Ahlborn. “The main problem we have is there’s no rail line, no metro line in the world that’s profitable — they all depend on public subsidies.”