An outline business case is being prepared for the Cambridgeshire Autonomous Metro, with £3million made available on July 31 to undertake the work.
The Cambridgeshire and Peterborough Combined Authority Board approved the next phase of funding, which was higher than expected as no private sector investment was sought as originally anticipated.
Director of strategy and delivery, Paul Raynes, said no formal discussions had been held with private sector partners over funding, but added there was interest.
He said it was a "deliberate decision" to proceed with public sector funds only, as the authority "did not feel it was appropriate bringing in private sector funding at this stage".
According to a report released in April, the new metro system, that could link Cambridge to St Neots and Huntingdon, is expected to cost £4billion.
A strategic outline businesses case compiled by consultants Steer said the CAM could improve the transport system in the county "significantly" and there was a "compelling case" for the idea.
The report also said that up to 100,000 jobs and 60,000 new homes could result from the metro system, which would connect Huntingdon, Alconbury, St Ives and St Neots to Cambridge.
Speaking after the meeting mayor James Palmer said: "The concern would be that if the private sector members of the partnership board put money in the CAM now it might be seen as them having undue influence in future".
The partnership board is a new group set up by the combined authority, made up of public and private partners, which will support the CAM and seek further investment, and includes the Greater Cambridge Partnership, the University of Cambridge, the biomedical campus, the science park, the Cambridge Ahead group and Marshall.
The partnership board will "guide" the CAM which will "map out a path to future deliver arrangements after the OBC is delivered".
The board is an "informal body" and the combined authority and the Greater Cambridge Partnership will retain their decision-making powers.
The CAM funding approved by the combined authority board will see the 2019/20 budget raised from £1m to £1.78m, with £965k for the year after. The Greater Cambridge Partnership will also contribute £300,000.
Mr Raynes told the board the next phase will be "moving to the very big sums," possibly more than £10m.
The outline business case is due to for completion by "summer 2020," and it follows the completion of the strategic outline business case approved in March.