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Encrypted comms company Silent Circle closes $50M Series C

ICE Graveyard 15/07/2016 Natasha Lomas

Encrypted comms company Silent Circle, which also makes a security-focused Android smartphone called the Blackphone, has announced it’s closed a $50 million Series C round of financing, led by Santander Bank.

The company was in the news recently on account of a lawsuit brought against it by former business partner Geeksphone for non-payment of an outstanding $5 million, relating to the sale of the latter’s half of the joint venture.

Court documents pertaining to that litigation suggested Silent Circle closed an unannounced $25 million Series C round earlier this year. Letters from the court case also reveal it had been hoping to raise an additional $20 million to pay down some of its debt at the time but had been unable to raise that additional funding.

It’s unclear whether the $50 million Series C announced today is all new money for Silent Circle, or whether it includes the earlier $25 million Series C detailed in the court documents. We’ve asked Silent Circle to clarify and will update this post with any response. Either way it looks like they were ultimately able to secure the larger Series C round they had been hoping for.

Since buying out its hardware partner in the Blackphone joint venture Silent Circle has shifted from more of a prosumer focus with the original Blackphone smartphone sales pitch to pushing what it dubs an enterprise privacy platform business — which brings together a suite of software services, such as its Silent Phone secure calling, messaging and file sharing software with encrypted calling plans that expand secure calling to non-subscribers, and user management services via a web-based admin console that targets businesses needing to manage mixed estates of iOS and Android handsets in a BYOD world.

Silent Circle’s hardware foray with the Blackphone was supposed to complement this software platform strategy but court documents from the litigation reveal that the first generation device in fact failed to deliver the expected sales, forcing Silent Circle to fall back on its software business and cut operational costs, including making significant staff reductions.

Key co-founder Jon Callas recently departed the company for a role at Apple, while another senior employee who joined from Geeksphone is also no longer at the company. Various other more junior employees have apparently been let go.

Silent Circle said today that the new financing will go towards “eliminating its debts”, as well as further investment in product development, customer service, business development and marketing activities. As part of the funding round cyber security investor Bob Ackerman is also joining the board.

It’s not clear if Silent Circle intends to settle the litigation with Geeksphone now it’s closed a full Series C — again we’ve asked, and will update with any response.

The company’s general counsel Matt Neiderman is now listed as its interim CEO, although co-founder Mike Janke remains as chairman. Another former CEO, Bill Conner, departed last month according to his LinkedIn profile.

On Neiderman temporarily occupying the CEO role, a spokesman for Silent Circle told TechCrunch: “Matt has been with SilentCircle since its formative days and has worked closely with the other company leaders on the executive team. As Chief Legal Officer he brings a valuable skillset, both as the firm moves through its current litigation and positions itself to experience even more growth and momentum in the enterprise privacy market. He has been a part of all the key aspects of the business. So, he’s a good fit for the role.”

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