SOC 2 for SaaS Startups: Key Benefits and How to Get Started
Is your SaaS startup prioritizing cybersecurity compliance? Today, it’s an indisputable fact that growth-stage companies must lay a foundation of strong security infrastructure to keep scaling at a steady pace and counter cyber threats seeking to compromise their data.
If you haven’t heard the term SOC 2 (System and Organization Controls 2) referenced during a sales call or competitive analysis, you will soon enough. SOC 2 audits assess an organization’s ability to securely handle customer data and have become the gold standard of information security attestations.
The popularity of SOC 2 among startups and technology companies has never been greater: Our 2022 Compliance Benchmark Report discovered that SOC 2 is the compliance service most frequently sought out by tech companies (81%) as well as by companies generating between $5-50 million in annual revenue (69%).
Read on for more information about why SOC 2 should be a business priority, the benefits of SOC 2 for SaaS startups, and tips for getting started.
Why Should SaaS Startups Prioritize SOC 2 Compliance?
At this point in your software startup’s growth journey, you’ve likely proven your value hypothesis and found a strong product-market fit. There is demand for your offering so now you’re working hard on your go-to-market (GTM) strategy, drilling down crucial elements like timing, brand positioning, and defining target segments.
Businesses in the GTM phase often underestimate the weight compliance maturity holds in their growth plan. Having a strong security posture validated by an independent third party is just as important as other high-value activities like accelerating time-to-value, optimizing customer acquisition costs, and increasing retention rates.
Due to SOC 2’s rock-solid reputation for ensuring security best practices and protocols are in place, it has essentially become a requirement for SaaS startups looking to scale up and sell to enterprise customers. Even if you have adopted some security tools and processes, gaps are sure to exist that won’t be discovered until a prospect starts asking questions and wants to see a SOC 2 report.
It’s best to invest in a foundational compliance framework, like SOC 2, as early on in your startup’s growth journey as possible. This is because the larger and more complex your operations become, the more difficult it will be to get everything in order to undergo an audit. Invest in SOC 2 now and it will pay dividends as you grow — your future self will thank you.
What Are the Benefits of SOC 2 for SaaS Startups?
Your startup will inevitably need a SOC 2 report to go upmarket and close big deals. Here are some of the additional benefits you can look forward to enjoying after earning a SOC 2 report.
SOC 2 Helps Develop Strong Policies and Procedures
Does your business have a tested and documented data retention policy? Do new hires know how to maintain account password security? What are the steps you will take in the event of a ransomware attack?
Preparing for a SOC 2 assessment will yield answers to all of these questions and more, as your company must document policies and procedures that describe the key processes and controls related to your information security program.
SOC 2 Builds Credibility with Banks and Investors
Fast-paced startups often hit a wall when they encounter the complex approvals and regulations commonly associated with banks and investors. Having a SOC 2 report in hand is a great way to demonstrate your security maturity and assuage any concerns that may arise. The SOC 2 experience will also leave you well prepared to answer any impromptu questions a bank or investor may have about security.
SOC 2 Provides a Competitive Advantage
Many enterprise prospects will want to see a SOC 2 report — and those that don’t ask for a report will likely want you to complete a 500+ security question survey in its stead. With SOC 2 you will be able to demonstrate your security posture much faster than competitors that don’t have a report in hand.
SOC 2 Is Much More Affordable than the Alternative
$4.24 million is the average price associated with a data breach. SOC 2 helps your business minimize the risk of a security incident by identifying potential vulnerabilities and control gaps that could be exploited by threat actors.
But, it’s simply not enough to just ‘check-the-box’ on a SOC 2 examination. You’re already spending a great deal of time and resources to complete this assessment so be sure your SOC 2 is conducted and validated by a third-party assessor. The auditing firm you choose should have a great deal of SOC 2 experience as it’s important your organization is truly secure.
How Can My SaaS Startup Prepare to Earn a SOC 2 Report?
One of the first things you will need to decide about your SOC 2 assessment is choosing which of the five Trust Services Criteria you would like to be audited against:
- Security (Required)
- Processing Integrity
Check out this article for details about each of the SOC 2 Trust Services Criteria and guidance on which to include in your assessment.
If this is your first time pursuing SOC 2, it’s highly recommended that you leverage a Readiness Assessment to identify high-risk control gaps and receive recommendations prior to your audit. As a first step, complete our SOC 2 Checklist to see what steps you can take right now to get the ball rolling on your SOC 2 journey.
Here are a some other tried-and-tested tips you can use to prepare for SOC 2:
- Establish a baseline of good security practices
- Set up alerts to detect security anomalies
- Ensure proper logging is in place
- Prioritize the most important controls
- Schedule key activities to stay on schedule
- Leverage a strategic compliance partner
Carefully Choose Your Trusted SOC 2 Partner
SOC 2 has become table stakes for SaaS startups that want to stay competitive and maintain the growth trajectory they desire. Because of the importance of a SOC 2 report to your business you want to make sure you find the right partner. When conducting due diligence on potential auditing firms, keep in mind that you need more than simply a SOC 2 auditor, but rather a partner that will help your organization scale and grow by supporting other security frameworks.
We are the top issuer of SOC 2 reports in the world with thousands of assessments under our belt and the only auditing firm that can take you from readiness to report. Our team will ensure you are set up for success in the auditing process and identify opportunities to combine efforts with any other compliance needs you may have. Reach out to learn more about getting started with SOC 2.
“With a flawless SOC 2 examination and streamlined HIPAA assessment, we plan to stick with A-LIGN as our auditing partner for a very long time.”