Why is SOC 2 Important for Startups: A Guide for CTOs

If you’re reading this article, you’re probably asking yourself questions such as Why is SOC 2 important? Should I get SOC 2 compliant? This is a question every tech leader asks themselves, especially after raising a new funding round.

And the answer is: it depends. The goal of this article is to give you an overview of if you should get certified now, and why that matters. I’ll keep the article as short and to the point as possible. 

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30-second summary of this article:

• Getting certified is more important than ever. There are 80 new vulnerabilities being published every day, and it takes criminals only 15 minutes to begin mass exploiting them. The stakes are high.
• SOC2 helps close sales, protect your reputation, and improve your security posture.
• It can cost upwards of USD 80,000, but it’ll pay for itself by preventing data breaches (which carry hefty fines!) and by helping you close enterprise deals requiring strict security practices.
  
  

(A note: while I use the term certification sparingly, keep in mind that SOC2 is not a certification but more of a security framework. For clarity, I’ll stick to certification, but keep the distinction in mind)

Why is SOC 2 Important for Tech Companies?

SOC 2 (Service Organization Control 2) is designed to ensure that service providers securely manage data to protect their organization and the privacy of their clients. This is especially relevant for tech companies, as obviously their whole business is software. 

SOC2 has seen a surge in interest in the last few years, and for good reason. Cyberattacks are on the rise, and the number of new CVEs - that is, software vulnerabilities - published per year keeps increasing. Recent estimates point to 80 new CVEs published per day, with an average CVSS score of 7.7, making them highly impactful to organizations. This problem just gets worse by the fact that cybercriminals take only 15 minutes to mass exploit a new CVE automatically.

It’s this hostile climate that prompts organizations to get certified. SOC2 isn’t just a nice badge - it’s a collection of systems and processes that improve your security posture, and that’s why it matters. Having SOC2 in place shows that:

• You’re credible and trustworthy: In an era where data breaches make headlines almost daily, customers are more cautious than ever about who they trust with their data. Data shows that the average cost of a data breach in 2023 was USD 4.45 million, reflecting the impact an attack has on the business and its reputation.
• Meeting Buyer Requirements: You’re as secure as the weakest link in your supply chain. As enterprises begin demanding more from the companies they work with, getting certified becomes more lucrative too, as it can help you close deals.
• Improving Internal Processes: The process of achieving SOC 2 compliance often leads to improved internal processes and controls. This can result in more efficient operations, reduced risk of errors, and better overall security posture.

• Regulatory Compliance: While SOC 2 itself is not a government regulation, it can help you meet various regulatory requirements, such as GDPR or CCPA. This is increasingly important as data protection regulations continue to evolve and expand worldwide.

Main Benefits of SOC 2 Compliance: Real-World Scenarios

The best way to understand the importance of compliance is through real-world examples. SOC2 can help you in 4 different scenarios.

It protects your data and reputation

Let’s say your product handles extremely sensitive data - financials, payments, health, or internal company communications. You’re storing huge amounts of data, both from yourself and your customers. A data breach could be a disaster, for your customers, your reputation, and your company’s future.

With SOC 2, you’d have robust controls in place to protect this data. It includes regular security assessments, monitoring for unusual activity, and strict access controls. This significantly reduces the risk of a breach and provides a framework for rapid response if an incident does occur.

It grows revenue

Being SOC2 certified can help tremendously in conquering enterprise accounts. Imagine you’re in talks with a Fortune 500 company for a deal that could 10x your ARR. But during the procurement process, they ask about your SOC 2 compliance.

Lacking it, it’s very likely that the deal would fall through. But with compliance already in place you could quickly provide the necessary documentation, speeding up the sales process and instilling confidence in your potential client. This can be the difference between winning and losing major contracts.

It reduces your burn rate

Being certified will help you move into new markets, such as the European Union, where compliance with GDPR is crucial.

Many of the controls and processes required for SOC 2 compliance align with other regulatory requirements. By implementing SOC 2, you're laying the groundwork for easier compliance with other standards, potentially saving significant time and resources in the future.

It sets you apart from competitors

Lastly, when a potential customer is unsure whether to choose your product or your competitor’s, having certifications in place will help you. It shows your commitment to security and can be a deciding factor for security-conscious customers.

What's Needed to Achieve SOC 2 Compliance?

I won’t go over this too much in detail, as that’s the topic of another article. However, to achieve SOC 2 compliance you need to:

1. 1. Determine Your Scope: Decide which of the five Trust Services Criteria (Security, Availability, Processing Integrity, Confidentiality, and Privacy) are relevant to your business.
   2. Perform a Gap Analysis: Assess your current practices against SOC 2 requirements to identify areas that need improvement.
   3. Implement Controls: Based on your gap analysis, implement the necessary controls and processes. One thing you’ll need is continuous monitoring of your systems. You can find out more about how to do that with AI Automated Pentesting.
   4. Document Policies and Procedures: Clearly document all your security policies and procedures.
   5. Conduct Internal Audits: Regularly test your controls to ensure they're working as intended.
   6. Engage an Auditor: Work with a certified public accountant (CPA) firm to conduct the official audit.
   7. Maintain Compliance: SOC 2 isn't a one-time achievement. You'll need to continuously monitor and improve your practices to maintain compliance.

Want to know more about your Digital Exposure? Request a free recon scan from us to get started on your SOC 2 compliance journey.

How much does it cost to get SOC 2 compliant?

While there isn’t a set number for the price of obtaining SOC 2 compliance you can expect to invest between USD 80,000 to USD 150,000, depending on the size of your organization. Additionally, you can expect to invest between 6 to 12 months in getting certified.

Source: SecureFrame

What's the difference between SOC2 and ISO 27001?

While this article focuses on SOC2, there’s a doubt that props up when you discuss security frameworks and certifications: which should I get first?

These two are completely different from each other and have different goals. I’ll summarize the key points here:

• While ISO 27001 is geared towards every type of organization, SOC2 is specific for tech companies and cloud service, making it a prime pick for scaling startups
• ISO 27001 is focused on establishing a robust ISMS (Information Security Management System), to make sure the organization has a robust security posture and does a proper risk assessment.
• SOC 2, on the other hand, focuses on whether these controls are being effective and running well.

Makes sense? If you want to learn more about ISO 27001, stay tuned to our blog - we’ll publish an article about it in the coming weeks

Conclusion

To summarise, SOC2 is more important than ever as cybercriminals become faster and more far-reaching. It’s this climate of hostility and high risks that makes certifications better than ever - they’ll help you prevent data breaches while also helping your close enterprise deals for your company.

One of the things you’ll need to get certified is an active and continuous stance towards security testing. And the best way to do that is by implementing Automated Pentesting in your organization, which will test your assets for new vulnerabilities 24/7. Find out more about how our Automated Pentesting solution can help you stay secure.