The HEAT project focuses on developing technology that enables both privacy and functionality simultaneously resulting in new application areas and business models. The classical approach to securing information is simply to encrypt it. The resulting ciphertext not only is impossible to decipher (except for the legitimate key owner), but it is typically also impossible to process the underlying plaintext solely by manipulating the ciphertext. What is required for functional privacy applications are mechanisms that support computation on encrypted data, known as homomorphic encryption. These mechanisms naturally bridge the fundamental divide between privacy restrictions on the one hand and functionalities on the other hand.