Private Equity Suits Privada

Web weary software provider Privada, is set to protect users from the invasive data collection habits of many of the Internet’s most popular sites.

Founded in 1997, Privada intends to tap the venture capital market for $5 million later this fall. Proceeds from the proposed equity offering will be used to expand its marketing and customer support operations. The company completed its second round of equity financing for $1.5 million in June. Investors included members of the company’s May 1998, $300,000 angel round and other founding partners.

The San Jose, Calif.-based company intends to increase the population of online consumers, by addressing their number one concern, privacy.

“Eighteen months ago, the top issue for Internet users was the safety of information given – whether it could be hacked or obtained in the sending process,” said Barbara Bellissimo, chief executive and founder of Privada. “The top concern now is what happens to the information once it is received.”

According to a 1999 Georgetown Internet Privacy Policy survey, 92.8% of Web sites collect personally identifiable information from visitors. Yet, only 9.5% of those sites notify visitors of their data collection policies. Another poll from the Georgia Institute of Technology found that 88% of users value the ability to visit sites anonymously.

To that end, Privada has released its suite of products – Web Incognito, Messaging Incognito and Commerce Incognito, which is now in Beta testing – that allows Internet users to visit sites, send e-mail and conduct e-commerce without revealing personally specific information.

Currently, the company markets its Web Incognito software to individual users for a nominal fee. Privada markets Messaging Incognito to ISPs whose customers are demanding greater anonymity. The company believes the majority of its future revenue will be derived from licensing its Privada Network server architecture.

“Initially, we are offering services directly to individuals, but we expect the majority of our operations will focus on licensing agreements with ISPs and Web site operators,” Bellissimo continued.

Privada currently has a partnership agreement with Santa Clara, Calif.- based data center and site hosting company, Exodus Communications. Exodus hosts several of the Web’s most popular sites including, Hotmail, eBay and Lycos.