Compliance for Startups in 2026: The Complete Guide

At some point, every startup has to face compliance (usually not on their own terms). Maybe a Series A investor asked for policies, or a sales deal you’re handling slows down because you don’t have SOC 2 yet.

For most startups compliance comes to the fore as you move beyond seed and towards series A — a point where you have a product and a growing customer base. But in some industries, compliance with certain regulations (GDPR, CCPA) and frameworks (HIPAA if you deal with healthcare data) is essential from day one.

In this article, I’ll explain what compliance is, why it matters, and how to choose the right framework for your startup.

What is compliance for startups? (And who actually needs it?)

Compliance for startups is a process to prove that your company follows security, privacy, and quality standards. Startups, like any other businesses, have to follow legal and regulatory rules. Compliance ensures that you operate within the boundaries of those rules so you can successfully operate.

Compliance is also important for growth. Many prospective customers will want to ensure your organization can be trusted with their data before signing a contract. So at a certain point, compliance can be one of the biggest growth blockers young companies face. Compliance is especially important as you move up market towards enterprise customers.

So, who needs it?

B2B, fintech, healthtech startups, or any company that stores sensitive user data or sells into the mid-market or enterprise. Your customers rely on these compliance certifications to build trust in your cybersecurity practices.

The law also enforces some of these rules. HIPAA, for instance, will fine you between $141 to $2,134,831, if you violate or neglect the violation of personal data.

Who doesn't need it (yet)?

If you own an early-stage B2C social app or gaming studios that only handles non-sensitive information like device IDs. Your B2C customers usually wouldn't ask you for compliance reports, because they care more about fun and usability of the app, and they're not dropping sensitive information anyways.

So, if you don't have customers or investors pushing for it, you don't need to prioritize audits over core development. You can do it later. But you’ll still need to ensure you meet consumer privacy requirements like GDPR (General Data Protection Regulation) or CCPA (California Consumer Privacy Act).

Why Compliance Matters for Startups

1. Trust and Risk Management

B2B startups sell products, but you're also selling trust. Most B2B software products hold a lot of information, and clients want to know their information is safe with your organization before they finalize the deal.

2. Dealflow

Let’s be honest, compliance is expensive. A SOC 2 report can cost anywhere $5,000-$20,000+ for the audit alone, that’s why many startups hold off for as long as they can. But the real cost is the ACV (Annual Contract Value) of the deals currently stuck in your pipeline — or not even engaging with you — because you don’t have the required security programs in place.

The more you hold off on compliance, the more your company is at risk of losing customers that you can't afford to lose.

3. Internal Knowledge

What do you do when a staff member leaves? How do you guard against hacks? Where is sensitive data stored in your systems? These are all questions that matter for startups and working towards a compliance framework like SOC 2 helps you to ensure everyone at your company knows the answer.

Compliance reports need continuous efforts. Even if you get a SOC 2 report, you need to continuously monitor your performance and renew again next year. Compliance forces internal knowledge and helps you to build a company that can be trusted when it comes to cybersecurity and data protection.

How To Choose The Right Framework

SOC 2 (The North American Standard)

SOC 2 is a voluntary framework by the AICPA that measures how SaaS companies protect their US-based customers' data. “Voluntary” means it’s not regulated or enforced, so no organization has to meet SOC 2 requirements, but the market will often demand it.

It assesses how you protect your customer data with five Trust Services Criteria (TSC): security, availability, processing integrity, confidentiality, and privacy. Every SOC 2 report mandates security, and then the other four TSC depend on if they are relevant to your business.

If you sell to enterprise customers in North American SOC 2 will be a requirement.

There are two types of SOC 2 report you can get:

• A SOC 2 Type 1 is a snapshot that evaluates your cybersecurity controls at a single point in time.
• A SOC 2 Type 2 highlights how your controls perform over a period of time.

Learn more on: How to Pick the Right Criteria for Your SOC 2 Audit.

ISO 27001 (The International Standard)

ISO 27001 is important if you sell to Europe, Asia, or largely international markets. ISO is built around a detailed information security management system (about 93 steps), with a defined set of controls that auditors verify. If you're looking to expand your business reach in a few years, ISO will present your company as a trustworthy to international buyers.

HIPAA, PCI, & GDPR

HIPAA, PCI, AND GDPR are legal requirements, rather than optional standards. You must follow these requirements,  based on your industry and the target market you serve.

• HIPAA: If your company handles customers’ Protected Health Information (PHI). Workstreet's HIPAA services can help you navigate this if you're in the HealthTech industry.
• PCI DSS: If you're a fintech company that stores, processes, or transmits credit card data.
• GDPR: If you process data of EU citizens.

Best Practices for Compliance for Startups

Understand the Framework(s) That Apply to You

Know the compliance frameworks that match your business model and the type of data you handle. For example, SOC 2 is common for B2B SaaS companies, while health startups that handle PII (Personally Identifiable Information) will need to work towards HIPAA compliance (though they may also need SOC 2).

You also need to consider your market. As we mentioned above, SOC 2 is seen as the gold standard for North America, but internationally, customers will expect ISO 27001, and if you sell into Europe you’ll need to consider GDPR and local privacy laws.

Train Your Team

Teach every employee what they need to do to keep the company compliant. Everyone touches data or systems, so everyone needs basic training. For example, you should ensure your:

• Sales and marketing teams don't over share sensitive information or violate NDA rules.
• Engineering team understands how to respond to security incidents and abides by rules on where dats should be stored.
• HR handles employee data securely, including how they handle background checks, to avoid internal privacy violations.
• Customer support to spot phishing attempts and log tickets properly.

Training your team helps you avoid simple mistakes that can cause security incidents or delay your internal and external audits.

It also gives auditors the confidence that compliance is part of how your company operates, and it's not just something you do at a time of the year.

Continuously Monitor Compliance

Compliance isn’t a one and done thing. You need to ensure every department is continuously monitoring for any vulnerabilities or changes. Make sure to run internal audits before any external audit or due diligence review. They help you spot gaps in your controls and fix those issues early. Regular audits also keep documentation up to date so you're ready anytime customers ask for proof.

Define Your Scope

The smartest way to execute is to be obsessive about your boundaries. If you don't define where your data lives, (AWS or any other third-party) you could lose track of your scope.

When you don't define the specific systems, services, data, people, and locations that need to meet the requirements of your chosen framework, you’ll need to do a lot more work to become audit ready, and your audits will be longer and more expensive.

Audits should focus on the prod environment where you keep customer data. For example, in many cases, if the marketing team doesn't touch production data, their laptops shouldn't be part of the primary audit evidence.

Use Managed Services to Meet Compliance Requirements

Compliance is complex, even if you’re familiar with each framework and the required policies and controls. One of the biggest mistakes I see early stage founders make is trying to go it alone. Not only are you risking failing an audit, you’re also pulling your team (and likely some of your top engineers’ time) away from building your product and operating your business.

Compliance partners like Workstreet have experience across a range of frameworks like SOC 2, ISO 27001, CMMC, HIPAA, GDPR, and more, and can help your organization get audit ready faster (and with much less stress).

We’ve helped companies, like Clay and Granola, achieve SOC 2 certification quickly without pulling their team away form their core responsibilities. Here's what Everett Berry, the head of GTM Engineering at Clay had to say about us:

"Workstreet has been a true partner," reflects Everett Berry. "They embedded security into our daily workflow, took on the heavy lifting, and enabled us to move faster by unblocking security reviews without draining our team."

Final Thoughts

Start the baseline work on your compliance as soon as possible, so you're ready when investors or customers start asking.

If you're not sure where to start from, we can help. At Workstreet, we use AI-powered automation with alongside ex-Big 4 security experts to help your organization prepare for audits faster.  Whether you need a SOC 2 report to close a deal or a virtual CISO to lead your strategy, we handle the heavy lifting so you can focus on building your product.