Startup founders constantly face competing demands as they build and scale their businesses. Engineering, product design, and sales all have legitimate claims to be the most urgent priority and sole focus of attention.
These pressures lead many founders to defer security and compliance investments until later. With small teams and limited financial resources, founders top priorities are building their product and acquiring their first customers. But it’s just as important for startups to establish robust security processes and earn key compliance certifications at an early stage.
Founders should think of compliance as one of those first few foundational things you can do in your company’s life cycle. Getting compliant now staves off a more expensive and time-consuming process later while boosting existing customers’ trust, closing new deals faster, and attracting interest from upmarket and enterprise customers.
With a full understanding of the hidden costs of delaying compliance and the benefits of not waiting, founders can make a clear business case for getting compliant from the start.
The hidden costs of delaying compliance
Many founders wait on compliance because they’re concerned it’ll divert cash and personnel they can’t afford to spare. In reality, pushing off investments in a scalable, automated compliance program carries both direct and indirect costs for startups:
- It’s more expensive and time-consuming to do later: It’s less costly for a smaller company to develop a formal compliance program and prepare for an audit. You have fewer employees to run through background checks and security awareness training. Your tech stack is simpler, with fewer tools to validate for security compliance.
- It delays or impacts deals with new customers: For many companies, SOC 2 compliance is table stakes for any vendor they’d consider working with. If you can’t furnish a SOC 2 report, you’ll miss out on those deals.
- It limits access to the enterprise market: Upmarket and enterprise customers are especially strict about vendor compliance. In Vanta’s State of Trust Report, nearly two-thirds of organizations say that customers, investors, and suppliers increasingly require demonstration of compliance. If you can’t meet customer compliance requirements, your company won’t be able to scale.
- It hurts existing customer relationships: Vanta’s State of Trust Report also found that 50 percent of businesses have terminated a vendor relationship over security concerns. By putting off the development of a formal compliance program, you increase your startup’s risk of being unable to sustain its existing customers’ trust—and may jeopardize those critical relationships.
- It increases reputational risk for your company and its customers: Vanta’s State of Trust Report also found that 48 percent of organizations believe good security practices increase customer trust in their business, up from 41 percent in 2023. Meanwhile, 62 percent of organizations say that third-party data breaches negatively impact their reputation, while fewer than 25 percent rate their visibility into vendor compliance as “very strong.” In other words, by investing in a formal compliance program now, your startup validates its security posture while reducing the risk of significant lapses—and the reputational fallout they could bring.
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