Privacy-Centric App Developer Proton Shifts to a Nonprofit Foundation Model

The Swiss-based company Proton, known for its commitment to privacy through services like ProtonMail, is adopting a nonprofit foundation model, echoing the steps of organizations like Signal and Mozilla.

The creation of the Proton Foundation marks a significant change, becoming the principal owner of the already established Proton AG. This move, detailed by CEO Andy Yen, aims to ensure the company’s sustainability without depending on donations, grants, or corporate partnerships.

Yen expresses that, unlike Signal, which has benefited from significant donations, and Mozilla, which relies on Google’s search revenue, the Proton Foundation seeks to maintain a profitable business model. This strategy allows the company to focus on its commitment to privacy without succumbing to the pressures of external financial stakeholders.

“The restructuring does not alter the operation of our core business,” Yen emphasized in a blog update detailing the transition. He explained that profitability remains an essential goal to ensure Proton’s mission of independence and self-reliance is met.

Proton’s decision to shift towards a for-profit model within a nonprofit framework illustrates the challenges associated with running a privacy-centered business, especially when attempting to remain independent from investor influence. Proton prides itself on its autonomy, eschewing VC investments and public cloud services in favor of in-house servers and infrastructure.

This innovative structural shift allows Proton to emphasize privacy while still benefiting from the agility of private enterprises, including offering stock options to attract leading talents in the industry. According to Yen, this model also leaves room for the possibility of going public in the future, aligning with the company’s growth objectives.

Yen believes this dual-model approach provides the best of both worlds—maintaining Proton’s original vision while fostering a culture of innovation, entrepreneurship, and fierce competitive drive.

Additionally, the Proton Foundation commits to allocating 1% of Proton’s revenue towards charitable causes, particularly those supporting privacy-centric products and initiatives.

The journey so far

Since its foundation in Geneva in 2014, Proton has evolved beyond its encrypted email service, ProtonMail, expanding into a host of privacy-enhancing products like VPN services, password management, digital calendars, and cloud storage solutions. While offering free versions, Proton also has paid subscriptions that provide advanced features across all its services.

Following its initial launch, Proton initiated a crowdfunding effort that garnered about $500,000, subsequently raising an additional $2 million from Silicon Valley’s CRV and the Swiss nonprofit organization Fondation Genevoise pour l’Innovation Technologique (FONGIT). The company has since declared its independence from venture capital investors, with FONGIT acquiring CRV’s shares in 2021.

Key figures including Yen, co-founder Jason Stockman, and chief engineer Dingchao Lu have transferred some of their shares to the foundation, establishing it as the primary shareholder. This group also includes distinguished members like web inventor Sir Tim Berners-Lee; ethics professor Carissa Veliz; and Antonio Gambardella, director at FONGIT.

With its newly established foundation, Proton ensures significant voting power is dedicated to preserving its mission, barring any changes in control without the foundation’s consent. This includes protection against hostile takeovers, guaranteeing Proton remains true to its foundational mission, according to Yen.