The Washington Post

Encryption company Silent Circle, creator of Blackphone, raises $30 million


A Blackphone security optimized smartphone designed by Silent Circle at the 2014 Mobile World Congress in Barcelona. (Angel Navarette/Bloomberg)

Silent Circle, the Maryland-based mobile security company that gained traction after revelations by former National Security Agency contractor Edward Snowden, just picked up a $30 million investment.

The company, co-founded by the developer of the e-mail encryption service Pretty Good Privacy, is helping to develop Blackphone, a secure smartphone, among other products. Silent Circle received the latest funding from venture capitalist Ross Perot Jr. and the private investment fund Cain Capital, the company announced Wednesday.

The money will be used to meet increased demand for Silent Circle’s existing products and services, launch new initiatives and hire more employees, said Mike Janke, Silent Circle’s chief executive.

Edward Snowden’s revelations last year about the extent of the NSA’s electronic surveillance on ordinary citizens sparked privacy concerns that helped propel Silent Circle’s products into the spotlight. Janke said the company experienced a 400 percent increase in growth last summer, which it was not prepared to handle.

“I don’t think we expected to be so disruptive,” he said. “That’s both scary [for a small company] and it’s good.”

The infusion of funds will help further Silent Circle’s goal to dominate the secure communications market, Janke said.

Blackphone, the mobile device that Silent Circle developed with Madrid-based Geeksphone is slated to hit the market next month. Based on current demand, Silent Circle expects to sell more than 3 million devices over the course of a year, Janke said.

Aside from Blackphone, the tech firm is developing a range of secure devices including the ‘Blacktablet.’ It will also release a private video-conferencing software designed to compete with Skype this summer, Janke said.

Meanwhile, the after-effects of Snowden’s revelations continue to shape the company’s plans.

Last year, Silent Circle and other secure e-mail providers such as Lavabit (the software that Snowden used) decided to shut down their services in order to avoid government requests for confidential customer information.

By next year, Silent Circle will unveil an “end-to-end” encrypted e-mail service, Janke said. This type of encryption does not place customer data in the company’s hands, which means it cannot be compelled to provide that information to the government.

The company moved its headquarters into a 16,000 square-foot facility in Maryland’s National Harbor earlier this year. In Wednesday’s announcement, Silent Circle also said it was moving its global offices from a Caribbean island to Switzerland because of the strength of that country’s privacy laws.

More than 70 percent of Silent Circle’s customers are based outside North America, according to Janke.

Amrita Jayakumar covers national startups, small business issues and entrepreneurship.
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