(Reuters) - Looking to find new friends or business partners among the hundreds of people you encounter each week? A new app may help.

The iPhone app called Highlight aims to transform how people meet by alerting users when they are physically near people with whom they share a connection such as mutual friends, similar interests or the same hometown.

"Nothing affects our happiness or influences our lives more than the people around us. But the way we find or learn about them, is -- and always has been -- completely random and inefficient," said Paul Davison, the founder of Highlight.

"Take San Francisco as an example. It's a city of 800,000 strangers. We sit on the bus and stand in line next to each other. But you don't know anything about anyone that you pass by. That doesn't seem weird, because it's always been that way. But if you think about it, it's kind of ridiculous," he said.

The Highlight app runs in the background on users' devices. When it makes a connection it sends each user the other's profile, including information such as names, photos, mutual connections and interests. It can include companies where they work, or neighborhoods where they live, if the information is provided on their Facebook profiles.

The app displays each user's current location on a map, within an accuracy of 35 to 50 meters (yards).

Davison said the evolution of social technology during the past decade has shown the natural urge to share information about ourselves and our curiosity about the people around us.

It is for these reasons that he thinks apps like Highlight, which have been defined as "people discovery" or "ambient awareness" will be embraced despite security concerns from critics.

He cited Facebook, Foursquare and Twitter as examples of how users have embraced technology that had raised privacy concerns, according to Davison.

"You see this pattern repeat over and over again. When they first launch, a lot of people look at it and say, ‘That's weird, that's creepy, why would I do that?'"

"But then a small subset of people give it a shot and find out that it's really fun and rewarding. Over time, more and more people see them having fun, and they hear good things about it, and they decide that the social benefits of being part of this thing and participating in this ecosystem outweigh the cost of the additional privacy they're giving up."

Davison added that all participants opt-in to using the app.

He said the company will have a heavy focus on security and adding more intelligence. For example, they will increase the ways in which Highlight identifies and makes a connection, depending on circumstances.

"If you and I are friends and both live in San Francisco and are three miles apart, that's not that interesting. But if you and I are both in Kansas three miles apart -- and didn't travel there together -- that's really interesting," he said.

Similar people discovery apps include Glancee, Sonar and Banjo.

(Reporting by Natasha Baker; editing by Bob Tourtellotte and Patricia Reaney)