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    Wall Street Journal: Funds Invest in Privacy Start-Ups

    The Wall Street Journal reports that venture capitalists are becoming more interested in businesses concerning privacy.

    Many of the investors include top-tier venture-capital firms such as Kleiner Perkins Caufield & Byers and Accel Partners. Venture firms such as Jafco Ventures, Atlas Venture and Battery Ventures also have invested in online-privacy start-ups in the past few months. [...]

    The jump in privacy-related investments underscores how ways to protect privacy on the Web and on mobile gadgets is increasingly viewed as a real business. That’s a shift from a few years ago, when companies struggled to sell such services, said Carsten Casper, an analyst at researcher Gartner. Among those that crashed earlier this decade was start-up Privacy Inc., which offered dummy email addresses for online purchases.

    But in the wake of recent privacy flaps involving AT&T, Facebook, Apple Inc. and others, consumer awareness has grown. “Privacy is a big issue and it’s going to get bigger because people realize it can be used against you,” said Ted Schlein, a venture capitalist at Kleiner Perkins and a ReputationDefender board member. “That spells market opportunity.” [...]

    Many venture capitalists liken today’s privacy market to the technology-security market a decade ago, when companies such as Barracuda Networks Inc. were searching for solutions to deal with viruses and hacking. Security has since become one of tech’s hottest markets, with businesses increasing their security spending by 10% to $33.8 billion world-wide in 2009, even as total tech spending fell 9% to $1.5 trillion for the year, according to Forrester Research. [...]

    Investors acknowledge the privacy market is nascent and will evolve as regulations are introduced. Still, the venture investments are an early look at the solutions emerging to help combat privacy incursions.

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