Security Startup Virtru Nabs $6 Million for Encryption

Virtru Corp., a startup that wants to make encrypting e-mails easier, has raised $6 million from Bessemer Venture Partners in a bet that mainstream Internet users and businesses want more control of their data to foil hackers and government spies.

The Washington-based startup, which has a staff of former U.S. National Security Agency cryptologists, makes software to reduce the hassle of securing sensitive e-mail. Unlike traditional encryption programs that require technical know-how to install and use, Virtru’s products work with e-mail services from Google Inc., Yahoo! Inc., Microsoft Corp. and Apple Inc., letting users secure messages with a few mouse clicks.

Demand for wider use of encryption technology is climbing following former NSA contractor Edward Snowden’s use of leaked documents to reveal the agency’s electronic spying. Snowden said in March that one lesson from the disclosures is that “encryption does work” and that material that is properly protected can be kept from prying eyes. The Virtru investment follows funding for other encryption companies, including $30 million last month for Silent Circle, a National Harbor, Maryland-based firm co-founded by encryption pioneer Phil Zimmermann.

One obstacle to bringing encryption technology to the masses has been the steep learning curve, which is what David Cowan, a partner at venture capital firm Bessemer Venture Partners, said appealed to him about Virtru’s approach.

“This is the first time I’ve ever seen a security system for e-mail that can really hit the Main Street,” Cowan said in an interview. “It has to be so easy that it’s invisible.”

Founding Brothers

Virtru was founded by brothers Will Ackerly, a former cloud security architect at the NSA, and his brother John, a former private-equity executive and U.S. Department of Commerce official. The product was rolled out in January.

Virtru’s product will be free for consumers, John Ackerly said in an interview, and the company will charge business customers for premium features. Virtru had earlier raised $4.25 million from angel investors, he said, declining to comment on the company’s valuation. The earlier investors included Bob Pittman, CEO of Clear Channel Communications Inc.

Some features of the software include consumers being able to revoke messages and restrict forwarding of e-mails, which can be activated even after messages have been sent. The technology has been in development since 2009 and is based on Will Ackerly’s security work with the NSA, said John Ackerly.

One potential handicap of the technology is that Virtru controls the private encryption keys for all messages, which means the company could be forced to turn them over to government agencies with a court order. The startup is working on new technology to let advanced users manage their own encryption keys, Ackerly said.

“We wanted to get this technology into as many people’s hands as possible,” he said.

The Virtru and Silent Circle investments follow a $9 million funding round for Wickr, a San Francisco-based startup that makes a mobile application whose messages permanently self-destruct and aren’t tracked.

To contact the reporter on this story: Jordan Robertson in San Francisco at jrobertson40@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson

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