SOC 2 Compliance for Startups: How to Achieve Compliance Without Slowing Down

You’re about to close your first major enterprise deal. Then as you’re about to sign, you get the message: "Can you please send over your SOC 2 report?"

For many startups this becomes a blocker as SOC 2 compliance feels like a burden that’s better left for later. But it shouldn’t be. SOC 2 isn’t simply a hurdle startups need to get over at some point, it’s a growth enabler that helps your business to scale quicker and close bigger deals, faster. 

In this guide, we’ll walk you through everything you need to know about SOC 2 compliance as a startup.

Why Startups Shouldn't Wait to Become SOC 2 Compliant

Waiting until a customer requests your SOC 2 report almost always creates a fire drill that puts stress on the team and revenue at risk.

Being proactive provides a powerful foundation of trust and a clear competitive advantage. It signals to the market that you are a mature, secure, and reliable partner. Here’s what getting compliant early actually does for you:

• Unlocks enterprise deals: Enterprise customers won't risk their data on a vendor without proven security controls. A SOC 2 report is often a non-negotiable requirement to even get past procurement, making it the key that unlocks larger B2B contracts.
• Builds investor confidence: During fundraising, investors look for signs of operational maturity and SOC 2 highlights that you take security seriously.
• Reduces sales friction: A SOC 2 report pre-answers questions that may otherwise come up in security questionnaires, helping to shorten your sales cycles.
• Saves time and money later: It’s far simpler and cheaper to build good security habits with a small team and a lean tech stack. Getting compliant early builds security into your company’s DNA, saving you the significant cost of retrofitting it later.

The Difference Between SOC 2 Type 1 and Type 2

The main difference between SOC 2 Type 1 and Type 2 is the period of time the audit examines.

‍SOC 2 Type 1 is a snapshot. An auditor reviews your security controls on a specific date and confirms: yes, these controls are properly designed and in place right now.

SOC 2 Type 2 tests the operating effectiveness of your controls over a period of time, typically 3-12 months. The auditor observes how your controls function in practice to verify their consistency.

Most startups begin with a Type 1 report as it’s the fastest way to satisfy an urgent request from an enterprise customer or investor. Then, they begin the monitoring period for a Type 2 report, which offers a higher level of assurance.

When is the Right Time for a Startup to Start SOC 2?

One question I get a lot is, "When do we really need SOC 2?" While there’s no magic date that works for every business, I tend to advise founders and GTM leads to look for specific triggers in their startup journey: 

1. You're targeting enterprise customers: This is the biggest sign you need to start looking into SOC 2. The moment your sales team starts pursuing enterprise customers or customers in regulated industries (like finance or healthcare), the SOC 2 question will come up. Don't wait for it to block a deal.
2. You're approaching Series A or B: Many investors will expect to see SOC 2 as a sign you take security seriously.
3. You're handling sensitive data: If you touch personally identifiable information (PII), protected health information (PHI), or other confidential customer data, you have a responsibility to protect it. 

5 Steps to SOC 2 Compliance for Startups

1. Understand the five Trust Services Criteria

SOC 2 is built around the five Trust Services Criteria (TSC) defined by the AICPA:

1. Security: Proves you protect data from breaches, leaks, and unauthorized access. Every SOC 2 audit includes Security.
2. Availability: Concerns whether your systems are available for operation and use as committed or agreed. Think uptime and performance.
3. Processing Integrity: Confirms your systems process data correctly, completely, and on time
4. Confidentiality: Demonstrates you only share sensitive data with people who need it for legitimate business reasons.
5. Privacy: Verifies you handle personal data transparently, from collection through deletion.

While covering all five TSCs is ideal, it's not always necessary. Focus on the criteria that actually matter for your business. Most startups nail Security plus one or two others that directly impact customer trust.

2. Perform a readiness assessment

Before you climb a mountain, you check your gear. A readiness assessment (or gap analysis) does the same for your SOC 2 journey. It's a "pre-audit" that compares your current security practices against the SOC 2 requirements. After your readiness assessment, you'll have a list of "gaps" to fill before your audit.

3. Remediate gaps and implement controls

Based on the gap analysis, you'll implement the required security controls. "Controls" are just the specific actions, policies, and systems you use to safeguard data. Examples include:

• Setting up formal access controls for your systems.
• Implementing endpoint detection and response (EDR) on employee laptops.
• Training for your team on security.
• Creating and testing an incident response plan.

4. Evidence collection

A SOC 2 audit requires you to prove your controls are working. This used to mean manually taking thousands of screenshots. Today, this is where compliance automation platforms are essential. Tools like Vanta and Drata connect to your tech stack (AWS, Google Cloud, GitHub, etc.) and automatically collect the evidence needed for your audit. As a Vanta partner, we help startups implement these platforms to put 80-90% of evidence collection on autopilot.

5. Select an auditor and complete the audit

The final step is the formal audit performed by an independent, AICPA-accredited CPA firm. They'll review your policies and the evidence from your automation platform. Upon successful completion, they'll issue your official SOC 2 report.

How Much Does SOC 2 Compliance Cost for Startups?

While SOC 2 may seem like an unplanned expense or distraction, in reality, the cost of compliance is far less than losing or even slowing down enterprise deals. But here are some figures to help you understand what it may cost: 

• Compliance automation platform: Tools like Vanta or Drata become your control center, automating evidence collection, tracking compliance gaps, and making audits painless. These tools typically range from $7,000-15,000 per year for startup. 
• Audit fees: This is what you pay the independent CPA firm to perform your audit. For a first-time Type 1 audit focused on Security, expect to pay between $10,000 and $20,000. Type 2 audits are generally more.
• Advisory and readiness (Optional): A partner like Workstreet can speed up your compliance journey and turn a months-long slog into a sprint. Expert advice can help you skip the trial and error many startups face when they first attempt to get certified. 

Once you’re certified, SOC 2 will pay for itself very quickly through faster sales cycles and more enterprise deals closing. 

Your Next Steps for a Smooth Compliance Journey

SOC 2 isn't a compliance checkbox, it's your ticket to enterprise deals and faster sales cycles.

The difference between companies that struggle through 9-month compliance projects and those that get certified in weeks? They don't try to figure it out alone.

Workstreet has guided 200+ startups from zero to SOC 2 certified, helping to turn compliance from a cost center into a revenue accelerator. Ready to close more enterprise deals? Get started with Workstreet’s readiness to audit management.

SOC 2 for Startups Frequently Asked Questions

What's the difference between SOC 2 and ISO 27001?

SOC 2 is a popular framework in North America focused on Trust Services Criteria, while ISO 27001 is a global standard for an Information Security Management System (ISMS); many companies get both, but SOC 2 is often the first request from US customers.

Can we get SOC 2 compliant if our team is fully remote?

Yes, the SOC 2 framework is adaptable to remote work environments, but it requires specific controls for things like endpoint security on employee laptops, secure Wi-Fi policies, and virtual private networks (VPNs).

Do we need a lawyer for the SOC 2 process?

While you don't need a lawyer for the audit itself, it's wise to have legal counsel review or draft customer-facing documents like your Privacy Policy and Terms of Service, which are often part of the compliance scope.

How long is a SOC 2 report valid for?

A SOC 2 report is generally considered valid for 12 months, after which customers and prospects will expect to see a new report from your next annual audit cycle.

What happens if we fail a SOC 2 audit?

Failing an audit is rare if you've done a readiness assessment, as you'll know your gaps beforehand. If an auditor finds an issue (an "exception"), it will be noted in your report, and you'll be expected to create a plan to remediate it.