Compliance for Startups

ISO27001, SOC1, and SOC2 are phrases that all software startups will hear at some point in their evolution. But when do you need them, and what’s involved?

Understanding Compliance

For software startups, navigating the world of compliance can be daunting. Acronyms like ISO27001, SOC1, and SOC2 float around boardrooms and investor meetings, normally with a sense of urgency. But before diving into the specifics, it’s important to understand what these standards mean and why they matter.

ISO27001 is an international standard for information security management systems (ISMS). It’s designed to help companies manage the security of assets like financial information, intellectual property, and employee data.

On the other hand, SOC1 and SOC2 are audit frameworks developed by the American Institute of Certified Public Accountants (AICPA). SOC1 focuses on financial reporting controls, while SOC2 assesses a company's information systems based on principles like security, availability, and privacy.

When Does a Startup Need Compliance?

The timing for addressing compliance depends on a few factors, most notably the nature of the business and the clients being served. Startups dealing with sensitive data, such as financial services or healthcare, may need to achieve compliance early on, especially if they're pursuing enterprise clients. B2B software startups often find that larger customers will insist on ISO27001 or SOC2 certification as part of their vendor due diligence.

Even if compliance isn’t immediately necessary, it’s wise to plan for it early. A common mistake startups make is waiting until a client demands certification, only to find that achieving compliance can take months, if not longer. Being proactive in building security and data management best practices can smooth the path when the time comes to get certified.

What's Involved in Becoming Compliant?

The process of achieving compliance is rarely simple. It involves creating robust policies, training employees, and documenting your practices thoroughly. For example:

• ISO27001 requires you to establish a formal ISMS, which includes a risk management framework, incident response plans, and regular audits. This standard emphasises continuous improvement, meaning compliance is an ongoing process, not a one-off task.

• SOC2 is slightly more flexible but still requires startups to adhere to key principles. You’ll need to demonstrate that your systems and processes are secure, available, and private, usually through a rigorous audit by a third party.

For both standards, documentation is key. Auditors will want to see clear evidence of how your company handles risks, how you train staff, and what measures are in place to prevent and respond to security breaches.

But no company is on their own trying to navigate it all. Companies such as Bridewell in the UK can provide trained professionals to help achieve certification more quickly, and help to lessen the impact by customising certification needs with what's realistic and appropriate for a business. To get an idea of cost, for a company of 150-200 employees, £75,000 is a good starting point. Additionally, trained quality professionals can be brought onto staff full time to take ownership internally to help setup and maintain compliance.

The Business Impact of Compliance

Compliance can seem like a burden for a fast-growing startup, but it offers significant benefits. Achieving ISO27001 or SOC2 certification provides external validation that your company takes security seriously. This can be a major selling point when attracting enterprise clients, or even during fundraising rounds, as investors increasingly look at security and compliance as part of their due diligence.

Moreover, building a culture of compliance early on can actually foster better operational discipline. Many startups that implement ISO27001 or SOC2 report that the process forces them to become more organised, reduce risks, and ultimately scale more effectively.

At some point, compliance is going to pop up on your radar. It might seem like a hassle, but getting ahead of it will save you stress in the long run. Start thinking about it now, and when those enterprise clients come knocking, you’ll be ready.