What's Inside

Increasing focus on information security is shaping the way that companies of all sizes deliver their products and services, showcasing their commitments to protecting client and user data.

Developed by the American Institute of Certified Public Accountants (AICPA), SOC 2 is a compliance framework that helps organizations manage data securely to protect client interests and privacy. Having a SOC 2 report in place is an excellent way to demonstrate that your company has established strong controls to protect and secure valuable information.

SOC 2 evaluates businesses based on five Trust Services Criteria (TSC): Security, Availability, Processing Integrity, Confidentiality, and Privacy. Security, also known as Common Criteria, applies to all reports, while the other four are only required where applicable.

For startups, navigating SOC 2 compliance can feel overwhelming, but it doesn’t have to be. In this article, we bust common myths, explain why defining the scope of your SOC report is crucial, and break down the differences between Type 1 and Type 2 reports. We’ll also discuss how SOC 2 compliance builds trust, offers a competitive edge, and can be more approachable than you think. Whether you’re just starting your compliance journey or looking to strengthen your security posture, this guide has you covered.

Summary of Key SOC 2 Compliance for Startups

Why SOC 2 Compliance Matters for Startups

Gaining client trust can be a significant challenge for startups, especially when competing against established players. SOC 2 compliance can be a game-changer: It provides tangible evidence of your security practices and operational maturity, making your business a more attractive and trustworthy partner.

Clients often take SOC 2 seriously—so much so that many will scroll to the bottom of your website looking for the SOC 2 badge before considering you as a partner. That small logo can be the deciding factor, especially when competitors offer similar services and pricing.

For startups, SOC 2 compliance is more than a checkbox; it’s often the key to unlocking new business opportunities. Larger clients, particularly those in regulated industries, often require a SOC 2 report before moving forward. By demonstrating that you’ve implemented controls to safeguard their data, you make it easier for them to trust your company.

There is a common misconception that SOC 2 compliance is only for established, large companies. In reality, businesses of all sizes can pursue and benefit from a SOC 2 report. Startups, in particular, stand to gain from demonstrating robust security practices early on. With clients increasingly seeking assurances about data protection, having a SOC 2 report can set you apart, regardless of your company size.

SOC 2 Type 1 vs. Type 2: What’s the Difference?

Understanding the distinction between SOC 2 Type 1 and Type 2 is key when embarking on your compliance journey:

• Type 1 evaluates the design of your controls at a single point in time. It’s essentially an attestation that your controls are well-designed and capable of achieving their intended objectives.

• Type 2 goes a step further by assessing the operating effectiveness of those controls over a defined period, usually 3, 6, or 12 months. This shows that your controls don’t just look good on paper but also function as intended in practice.

Think of Type 1 as a snapshot—it captures whether security controls are properly designed at a single point in time. Type 2, on the other hand, is like a film, assessing how those controls perform over a predefined period, providing a more comprehensive view of their effectiveness.

While Type 1 is a strong starting point, Type 2 is often the gold standard clients expect when evaluating reliability and operational maturity.

The Benefits of Early SOC 2 Compliance

Starting SOC 2 compliance in the early stages of your startup is both practical and efficient. It allows you to integrate security controls into your operations from the ground up, avoiding expensive and time-consuming fixes down the road. In addition, early compliance strengthens credibility with potential clients and investors, giving you a competitive edge as you scale. 

Establishing your SOC 2 compliance early not only helps you stand out but also simplifies the process of securing deals and building long-term relationships with clients. For startups aiming to grow, the trust and credibility that come with SOC 2 can make all the difference.

Some key advantages of early SOC 2 compliance include:

• Seamless integration: Embedding compliance into company processes from the beginning prevents costly rework later.

• Stronger compliance culture: Establishing compliance as a standard practice helps employees see security as a natural part of their work rather than an afterthought.

• Investor confidence: Demonstrating strong security controls early on can help attract funding and partnerships.

• Scalability: A well-structured security framework makes it easier to expand operations without compliance roadblocks.

• Competitive differentiation: Standing out from competitors that lack security credentials can yield new business opportunities.

The Scope Dilemma: More Isn’t Always Better

When defining the scope of their SOC 2 reports, some companies make the mistake of trying to cover all five TSCs, believing this will make the report more impressive. In reality, this approach often signals a lack of understanding about SOC 2 compliance.

It’s far more effective to focus on the TSCs that are most relevant to your business model and client needs.

While Security will always be part of your SOC 2 report, the other four TSCs are entirely optional. To help you determine the scope of your report, the following hints are a good starting point.

If your business provides B2B services where clients entrust you with their sensitive data, you’ll likely need to include Confidentiality in your SOC 2 report. However, if your startup operates in a way such that all stored information is already publicly available or doesn’t require restricted access, this TSC may not be essential.

If your business processes user data and makes commitments about how that data is handled—e.g., in a privacy policy or through contractual agreements—then Privacy may be relevant. However, if your startup doesn’t process personally identifiable information (PII) beyond basic account details, this TSC may not be necessary.

Does your company offer a critical application or promise high availability to clients? If the answer to this question is no, adding Availability is also not required.

Processing Integrity is only relevant if your company processes data in a way that directly impacts its completeness, accuracy, or timeliness for clients. This typically applies to companies handling financial transactions, such as payment processors and large e-commerce platforms. If your product or service doesn’t involve these elements, including Processing Integrity in your SOC 2 scope is unnecessary.

Focusing on the right TSCs not only avoids unnecessary costs, allowing you to allocate resources to the relevant activities to fulfill SOC requirements, but also demonstrates a clear, strategic approach to compliance that aligns with your business priorities.

How to Prepare for SOC 2 Compliance

Start with a readiness assessment or gap analysis to identify areas that fall short of SOC 2 requirements or need improvement. Involve key personnel in this process to ensure that you gather insights from those directly involved in daily operations—they are best positioned to uncover deficiencies and misalignments.

Once the analysis is complete, create action plans with clear ownership and accountability to keep compliance efforts on track. 

While SOC 2 has some room for customization, it still has requirements that are mandatory for all companies, regardless of size or maturity. For example, even startups are expected to perform adequate due diligence on their critical vendors or conduct periodic user permissions reviews. 

Consistent management engagement is essential to ensure an optimal outcome that reflects your company’s compliance goals.

Common Challenges for Startups

Misunderstanding control requirements can lead to inefficiencies. One of the biggest challenges for companies is determining which controls are relevant to their business models and how to carry out control activities. 

It’s important to note that SOC 2 doesn’t dictate how controls should be executed—it outlines what is expected for compliance. For example, one requirement is to document access requests and approvals for in-scope systems. How you do this is entirely up to you—it could be through a ticketing system, email, or any other tool that fits your operations. The key is to choose a method that ensures clarity and accountability. 

Unclear control execution can quickly lead to disorganized compliance efforts. Without a structured approach, it’s easy to lose track of what needs to be done and when.

Not having a clear roadmap to navigate the complexities of SOC compliance can become a major pitfall. Like any journey, this compliance trip requires a detailed map with well-defined milestones. This plan will serve as your lighthouse, guiding your team through each phase, keeping efforts aligned, and ensuring that nothing falls through the cracks.

Best Practices for Sustained Compliance

Achieving SOC 2 compliance is just the beginning—maintaining it requires ongoing effort. Unlike a one-time certification, SOC 2 compliance is an ongoing process that demands continuous monitoring, periodic testing, and proactive adjustments to keep up with evolving risks and business changes.

Here are five best practices for maintaining SOC 2 compliance: 

1. Make Control Testing a Routine: One-time reviews aren’t enough—implement a structured testing schedule to verify that controls are functioning as expected. Identifying gaps quickly allows for timely remediation before your next audit.

2. Keep Compliance Embedded in Daily Operations: Compliance shouldn’t feel like an extra burden—it should be part of your company’s everyday operations. Ensure that teams understand their roles in maintaining compliance. By making it a natural part of your processes, adherence becomes natural rather than an afterthought.

3. Ensure Continuous Monitoring and Improvement: SOC 2 compliance is dynamic. As your company scales, new risks and operational changes will emerge. Implement continuous monitoring mechanisms to detect potential issues in real time, and update your controls accordingly. 

4. Educate Your Team: A well-informed team is your first line of defense. Conduct ongoing security awareness training so employees understand compliance expectations and their roles in protecting sensitive data. 

5. Add Automation to the Equation: Resource allocation is a common struggle for startups, and when resources are limited, automation becomes the smartest move. Automating processes wherever possible helps reduce manual effort, streamline evidence collection, and keep control tracking efficiently.

Tools like Drata enable small teams to stay on top of compliance by managing workflows, monitoring requirements, and minimizing human error. From vendor risk assessments to personnel training, automation ensures that key tasks are handled consistently, deadlines are met, and all relevant requirements are fulfilled.

The ultimate goal in the SOC 2 compliance journey is to receive a report with no exceptions. Achieving this requires a proactive approach—treat compliance as an ongoing process rather than a one-time task. This proactive, ongoing approach not only facilitates successful SOC 2 audits but also strengthens the organization's overall security and operational resilience.

SOC 2 compliance might seem daunting, especially for startups juggling limited resources and competing priorities. However, it’s not just a regulatory checkbox, it’s a powerful tool to establish credibility, differentiate your business, and scale confidently. 

Defining a clear scope and starting early can turn SOC 2 compliance into a real competitive advantage.. 

While there are many frameworks in the market, SOC 2 is particularly relevant for technology companies and SaaS providers that store or process customer data in the cloud. Clients increasingly expect vendors to prove their commitment to security, and SOC 2 has become the go-to standard for demonstrating operational maturity in these industries.

If your company is involved with client financial reporting processes, be aware that SOC 1 might also come into play.

SOC 1 focuses specifically on controls that impact a client’s financial reporting. It assesses whether your systems and processes could affect the accuracy and integrity of their financial statements. While SOC 2 is the standard for companies handling customer data and operational security, SOC 1 becomes necessary when your services could influence financial audits or reporting obligations.

That said, for most technology companies, SOC 2 remains the most critical report for building client trust and unlocking new business opportunities.

Compliance is an ongoing journey, not a one-time event. By embedding security practices into your daily operations and staying proactive with monitoring and updates, you can ensure that SOC 2 compliance evolves with your business. In the end, this ongoing commitment to security and reliability strengthens client confidence and positions your startup for long-term success.