I been involved in the cryptography/security community for many years. I continually see privacy/security start-ups struggle. There are lots of reasons. But, I think the key one is that doing something online securely will always be more difficult and expensive that doing it insecurely. This truth was instilled like a law of physics when the internet was first designed.

There's only a certain number of people that are deeply passionate enough about their privacy to put in the extra effort or pay the extra cost. So, companies in the space tend to plateau after 2-4 years. They essentially saturate their markets and the (rather static) size of these markets are rarely large enough to sustain the company (this is especially true when hardware is involved in the business plan). In cases where they are sustainable, I have seen it be at the level of "life style business" rather than exponentially growing startup that can IPO at a level that will provide investors a significant return. While there have been exceptions over the years, I would caution people on HN from doing privacy and security startups until you sit down and honestly and truthfully estimate the size of the market that you are targeting.

Us old folk remember another secure phone company before SilentCircle/Blackphone - CryptoPhone. I have talked with some friends that remember the CryptoPhone product failure. Some thought that the Snowden revelations changed things. They thought that such companies would be viable now due to mainstream market apatite. But, I think over the next few years we'll see more evidence that this isn't the case.

Privacy is an area that is very easy to get passionate about and become emotionally invested in. But, it's probably not a great space for your startup (or for your investment).