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Pro-Privacy Blackphone Pulls $30M Into Silent Circle

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The Fourth Internet

Encrypted comms firm Silent Circle has just announced a new funding round which it says has been fueled by demand in the privacy-focused smartphone, Blackphone, the security hardened Android handset it’s building with Spanish startup Geeksphone.

Privacy, it seems, is a hot new investment area in these post-Snowden times. It’s also rather fitting, given Silent Circle was forced to preemptively shutter its encrypted email service last summer, in the wake of the NSA spying revelations, since it didn’t want to be complicit with government snooping on its users.

Instead of monetizing secure email, Silent Circle switched its focus to secure telephony — and that decision has been given a big boost by the new funding. The Blackphone, which is due to launch in June, went up for pre-order in February — costing $629 unlocked.

The $30 million funding round — Silent Circle’s first external funding — is led by investors including Ross Perot Jr. and private investment fund Cain Capital LLC, which is based in Dallas.

Perot Jr. and Sir Peter Bonfield, the former CEO and chairman of British Telecom, are joining Silent Circle’s Advisory Board, while Anurag Jain, formerly a senior Dell executive — and an investment partner of Perot Jr.’s, has been appointed as vice chairman of the board.

Silent Circle said it will use the new funding to meet what it dubbed “overwhelming demand” for Blackphone, and to accelerate its growth in the secure comms market.

Commenting on the funding in a statement, Jain said: “Having followed Silent Circle’s growth and profile in the industry, we are excited about backing the company’s future and fulfilling the wider demand for accessible, easy to use privacy apps that are already an indispensable means of communication. This is particularly true in fast-growing markets outside of the U.S. where demand for private communications solutions is fueled by strong privacy cultures, intrusive surveillance and censorship.”

To capitalize on a growing appetite for privacy outside North America, Silent Circle is relocating its global headquarters from the Caribbean to Switzerland, in Europe. It retains an office outside Washington, D.C. and in London, along with data centers in Canada and Switzerland — and employees “staged around the world”, as it puts it.

Silent Circle’s centre of gravity is evidently shifting, towards being a more international entity — and one that’s putting a little more distance between the heart of its business and the U.S. mainland.

“The move to Switzerland is extremely important for us as a company serving a global customer base. Switzerland’s strong privacy laws, legendary neutrality, and economic business advantages will allow us the ability to scale to Silent Circle’s rapid adoption by businesses, governments and individual pro-sumers around the world,” said Vic Hyder, Silent Circle Chief of Revenue, in a statement.

The main features of the forthcoming Blackphone Android handset are a set of privacy-focused apps, including Silent Phone and Silent Text for secure, encrypted telephony and messaging — using Silent Circle’s secure network — so that only you and someone also using a Blackphone or using Silent Circle’s service on another device are privy to the contents of the messages.

Other features included bundled third party services including secure cloud storage, a secure/non-trackable search product that uses a VPN to anonymise browsing on the device and a wi-fi anonymiser product.

The basic philosophy of Blackphone is to lower user resistance to adopting effective security measures by lowing the barrier to entry — via things like bundling with relevant third parties, and incorporating key security measures into the phone’s set-up.

For more on the device, read our closer look from earlier in the year.

Update: Asked how pre-orders are going, Geeksphone co-founder, Javier Agüera, told TechCrunch they have “exceeded expectations” — but wouldn’t disclose any figures at this time. He did say Blackphone has been intentionally limiting the amount of pre-orders it accepts to ensure it can deliver devices on time, and ensure “the adequate quality inspection this product deserves”, as he put it.

Take into account that Blackphone devices require special measures during manufacturing, for example there are security specialists in the plant making sure the software is properly loaded and without alterations. This accounts for a more costly manufacturing process, but is needed as part of one of the unique features of the device,” he said.

Agüera added that the release date is on schedule at this time. “For the time being there seems to be no deviation from the announced date by the end of June. PrivatOS in its first version is already in testing phase with promising results, and even though you never know with component supply nowadays, if we slip in the date it would be something very minor,” he said.