New York-based online photo marketplace Digital Railroad (DRR) is reviewing a buy-out offer after closing down because it ran out of cash. DRR had already cut staff to save money but, after failing to find hoped-for finance or a strategic partner, the buy-and-sell site abruptly went offline due to its “cash position” last week, giving users just three days to retrieve their photographs before servers were turned off.

But DRR’s adminstrator Diablo Management also said it had a letter of intent to buy the site’s hardware and software, with the suitor intending to make the photos accessible once again. Who’s the buyer? Diablo cryptically said it was a “20-year fixture” in the business that “owns a multi-agency digital media marketplace composing more than 25 million images, news stories, and video clips” which it licenses to 5,000 news media customers. Photographer hosting platform PhotoShelter had swooped on DRR’s collapse, offering ex users a deal on its own service.

It’s unclear why DRR ran out of money (perhaps another victim of the banking downturn?). But it had not-insignificant funding in the shape of a 2005 $5.2 million first round from Morgenthaler Ventures and Venrock Associates, followed by a $10 million second round last year from same plus London’s DN Capital.

• Digital Railroad Secures $10M In Second Round Funding
• Digital Railroad Raises $5.2M