SOC 2 for Startups: The No-BS Guide (2025)

It's 11pm. You're about to close your biggest deal yet. Then the email lands:

"Before we can proceed, we'll need to see your SOC 2 report."

You Google "SOC 2" and find yourself drowning in compliance jargon, $50K auditor quotes, and enterprise software that costs more than your monthly burn rate.

Sound familiar?

This guide is for you. No jargon. No sales pitch disguised as content. Just everything you actually need to know about SOC 2 as a startup founder—written by people who've been in that exact 11pm panic.

What Is SOC 2, Actually?

SOC 2 (Service Organization Control 2) is a security certification that proves your company handles customer data responsibly. It was created by the AICPA (American Institute of Certified Public Accountants) and has become the standard security credential for SaaS companies.

Think of it as a seal of approval that tells enterprise customers: "Yes, we take security seriously, and a third-party auditor verified it."

The 5 Trust Service Criteria

SOC 2 evaluates your company against five areas (you don't need all five—Security is the only required one):

| Criteria | What It Means | Required? | |----------|---------------|-----------| | Security | You protect data from unauthorized access | Yes (always) | | Availability | Your systems are up and running when promised | Optional | | Processing Integrity | Your systems do what they're supposed to do | Optional | | Confidentiality | You keep confidential info confidential | Optional | | Privacy | You handle personal data per your privacy policy | Optional |

Most startups start with just Security. Add others only if customers specifically require them.

Type 1 vs Type 2

| | Type 1 | Type 2 | |---|--------|--------| | What it proves | Your controls exist at a point in time | Your controls work over a period of time | | Timeline | 2-4 months | 6-12 months total | | Observation period | None | 3-12 months | | Cost | Lower | Higher | | Customer acceptance | Good for starting out | The gold standard |

The typical path: Get Type 1 first to satisfy immediate customer requests, then pursue Type 2 over the following year.

Do You Actually Need SOC 2?

Here's the honest answer: probably not yet. But maybe soon.

You Likely NEED SOC 2 If:

• Enterprise customers are asking for it. This is the #1 trigger. If prospects are requiring it to close deals, the math is simple: cost of SOC 2 is less than the value of deals you're losing.

• You handle sensitive data. Financial data, health data, PII at scale—customers will expect proof you're protecting it.

• You're selling to regulated industries. Finance, healthcare, government. These buyers have their own compliance requirements that cascade down to vendors.

• You're B2B SaaS with mid-market+ customers. Once you're selling to companies with 100+ employees, SOC 2 questions become routine.

You Probably DON'T Need SOC 2 Yet If:

• You're pre-revenue or pre-product. Focus on building something people want first.

• You're B2C. Consumer customers rarely ask for SOC 2 (though investors might).

• Your customers are small businesses. SMBs typically don't have compliance requirements.

• No one has asked. Don't solve problems you don't have.

The Real Decision Framework

Ask yourself one question: Have you lost a deal—or almost lost one—because of SOC 2?

• Yes: Start preparing now.
• No, but enterprise deals are coming: Start building the foundation (policies, basic controls).
• No, and no enterprise deals in sight: Focus on product. Revisit in 6 months.

The Cost Reality

Let's talk real numbers. The compliance industry loves to be vague about pricing. Here's what SOC 2 actually costs for a startup:

Auditor Fees

The audit itself—what you pay the CPA firm to examine your controls and issue the report:

| Company Size | Type 1 | Type 2 | |--------------|--------|--------| | Seed stage (5-15 employees) | $15,000-25,000 | $20,000-35,000 | | Series A (15-50 employees) | $20,000-35,000 | $30,000-50,000 | | Series B+ (50+ employees) | $30,000-50,000+ | $40,000-75,000+ |

These are rough ranges. Factors that affect cost: number of trust criteria, complexity of your infrastructure, auditor reputation.

Compliance Platform Costs

Tools like Vanta, Drata, Secureframe that help you prepare and automate evidence collection:

| Platform | Annual Cost | Best For | |----------|-------------|----------| | Vanta | $10,000-25,000/year | Series A+ with budget | | Drata | $7,500-20,000/year | Series A/B | | Secureframe | $7,500-20,000/year | SMB to mid-market | | Sprinto | $5,000-12,000/year | Cloud-native startups | | Compliance Copilot | $1,200-3,600/year | Seed stage, readiness focus |

For a deeper comparison, see our Vanta alternatives guide.

Internal Time Investment

The hidden cost that nobody talks about:

| Activity | Hours | |----------|-------| | Writing policies | 40-80 hours | | Implementing controls | 40-100 hours | | Collecting evidence | 20-40 hours | | Audit prep and Q&A | 20-40 hours | | Ongoing maintenance | 5-10 hours/month |

Total first-year investment: 150-300+ hours

For a seed-stage startup, this is often the founder doing it themselves. That's 4-8 weeks of part-time work on top of everything else.

Total Realistic Cost (First Year)

| Approach | Total Cost | Best For | |----------|------------|----------| | DIY + cheap auditor | $20,000-35,000 | Bootstrapped, technical founder | | Readiness tool + auditor | $25,000-45,000 | Seed stage, needs to move fast | | Enterprise platform + auditor | $40,000-75,000 | Series A+, complex infrastructure |

The uncomfortable truth: If you're pre-seed or early seed with less than $500K raised, traditional SOC 2 might be too expensive relative to your resources. That's exactly why we built a cheaper path focused on readiness first.

The Timeline

How long does this actually take?

Type 1 Timeline: 2-4 Months

| Phase | Duration | Activities | |-------|----------|------------| | Gap assessment | 1-2 weeks | Figure out what you have vs. what you need | | Remediation | 4-8 weeks | Write policies, implement controls | | Audit prep | 1-2 weeks | Collect evidence, prepare documentation | | Audit | 2-4 weeks | Auditor review, Q&A, report generation |

Type 2 Timeline: 6-12 Months Total

Everything above, plus:

| Phase | Duration | |-------|----------| | Observation period | 3-12 months (minimum 3, typically 6) | | Audit | 2-4 weeks |

The observation period is where auditors verify your controls are actually working over time, not just existing on paper.

What Takes the Most Time?

1. Writing policies — You need 10-15 policies covering security, access control, incident response, etc. Each needs to be customized to your actual practices.

2. Implementing missing controls — Background checks, security training, access reviews, encryption, logging. Whatever you're missing.

3. Building the evidence habit — Screenshots, logs, tickets. You need proof everything works.

The good news: once you've done Type 1, Type 2 is mostly waiting and maintaining.

How to Prepare: The Step-by-Step

Here's the practical path from "we need SOC 2" to "we have SOC 2."

Step 1: Gap Assessment (Week 1-2)

Before you do anything, figure out where you stand:

What you probably already have:

• Cloud infrastructure (AWS, GCP, Azure)
• Some form of access control
• Basic encryption (HTTPS, encrypted databases)
• A privacy policy on your website

What you probably don't have:

• Formal security policies
• Documented procedures
• Evidence of security training
• Access review logs
• Incident response plan
• Vendor management process

Create a simple spreadsheet: SOC 2 requirement | Do we have it? | What's missing?

Step 2: Write Your Policies (Week 2-5)

You need these core policies (at minimum):

1. Information Security Policy — The overarching security commitment
2. Access Control Policy — Who can access what, and how
3. Password Policy — Requirements for strong passwords
4. Acceptable Use Policy — Rules for using company systems
5. Data Classification Policy — How you categorize and handle data
6. Encryption Policy — What's encrypted and how
7. Incident Response Plan — What happens when things go wrong
8. Business Continuity Plan — How you recover from disasters
9. Vendor Management Policy — How you evaluate third parties
10. Change Management Policy — How you deploy code safely

Pro tip: Don't write these from scratch. Use templates as starting points and customize to your actual practices. A policy that describes what you don't actually do is worse than no policy—auditors will catch it.

Step 3: Implement Technical Controls (Week 3-8)

Common gaps for startups:

| Control | What to Do | |---------|------------| | MFA everywhere | Enable on all critical systems (AWS, GitHub, Google Workspace) | | Access reviews | Quarterly reviews of who has access to what | | Security training | Annual training for all employees (even if it's just you) | | Background checks | For new hires (yes, even at 5 people) | | Encryption at rest | Encrypt databases and backups | | Logging | Centralized logs for security events | | Vulnerability scanning | Regular scans of your infrastructure | | Endpoint protection | Antivirus/MDM on company devices |

You don't need enterprise tools for most of these. Google Workspace has MFA built in. AWS has CloudTrail for logging. There are free vulnerability scanners.

Step 4: Evidence Collection (Ongoing)

Auditors need proof. Start collecting:

• Screenshots of security configurations
• Logs of access reviews, security events
• Tickets showing your change management process
• Training records showing who completed what
• Policy acknowledgments showing employees read policies

Step 5: Choose Your Path

You have three options:

Option A: DIY

• Write policies yourself (use templates)
• Implement controls yourself
• Manage evidence collection in spreadsheets
• Hire auditor directly
• Cost: $15,000-25,000 (auditor only)
• Best for: Technical founders with time, tight budgets

Option B: Readiness Platform + Auditor

• Use a tool like Compliance Copilot for policies and tracking
• Implement controls with guidance
• Tool helps with evidence collection
• Hire auditor when ready
• Cost: $20,000-40,000
• Best for: Founders who want structure without enterprise pricing

Option C: Full Platform + Auditor

• Use Vanta/Drata/Secureframe for everything
• Deep integrations automate evidence collection
• Platform often includes auditor network
• Cost: $40,000-75,000+
• Best for: Series A+ with budget and complex infrastructure

The Startup-Friendly Approach

Here's what we've learned from working with seed-stage founders:

Start with Readiness, Not Certification

You don't need to be certified to answer "Do you have SOC 2?" credibly.

What you can say right now (if it's true):

• "We're SOC 2 compliant in our practices and pursuing formal certification."
• "We've implemented SOC 2 controls and can share our security documentation."
• "We're audit-ready and scheduled for certification in Q2."

Many prospects will accept security documentation and a credible timeline over "we have nothing."

What "Audit-Ready" Actually Means

Audit-ready means:

• You have all required policies written and approved
• You've implemented the technical controls
• You have evidence that everything works
• An auditor could walk in tomorrow and you'd pass

This is 80% of the work. The actual audit is just verification.

The Minimum Viable Security Stack

For a 5-person seed startup:

| Layer | Solution | Cost | |-------|----------|------| | Identity | Google Workspace with MFA | $6/user/mo | | Code | GitHub with branch protection | Free-$4/user/mo | | Cloud | AWS/GCP with CloudTrail logging | Usage-based | | Endpoint | JumpCloud or basic MDM | $7-15/user/mo | | Policies | Compliance Copilot or templates | $99-299/mo | | Training | Free online security training | Free |

Total: ~$50-100/user/month + your time

You don't need a $100K security stack to pass SOC 2.

Common Mistakes

Mistake 1: Waiting Until the Deal Is on the Line

The worst time to start SOC 2 is when a customer gives you a 30-day deadline. Even Type 1 takes 2-4 months minimum. Start building the foundation now, even if certification is months away.

Mistake 2: Over-Engineering

You're a 10-person startup. You don't need:

• Enterprise SIEM ($50K+/year)
• 24/7 SOC monitoring
• Every compliance framework at once
• The same tools as a 500-person company

Start simple. Add complexity as you grow. Auditors understand you're a startup.

Mistake 3: Ignoring It Entirely

"We'll deal with it when we have to" is a valid strategy until it isn't. Building security hygiene into your culture now is 10x easier than retrofitting it later. At minimum, document what you're doing and keep basic evidence.

Mistake 4: Policies That Don't Match Reality

Auditors will ask: "Show me how you do access reviews." If your policy says "quarterly" but you've never done one, that's a finding. Write policies that describe what you actually do (or will do), not aspirational ideals.

Mistake 5: Doing It Alone

SOC 2 is navigable but has gotchas. A few hours with someone who's done it can save weeks of wasted effort. Whether that's a consultant, a founder who's been through it, or a tool with good guidance—don't reinvent the wheel.

Frequently Asked Questions

"Can I do SOC 2 myself without a platform?"

Yes, but it's painful. You'll need to:

• Research all requirements yourself
• Write all policies from scratch (or find templates)
• Build your own evidence tracking system
• Manage the auditor relationship directly

It's doable if you're technical, have time, and want to save money. Most founders find the time cost isn't worth it.

"What's the minimum viable SOC 2?"

• SOC 2 Type 1
• Security criteria only
• ~10 core policies
• Basic technical controls (MFA, encryption, logging)
• Smallest reputable auditor you can find

This gets you a real SOC 2 report you can share with customers. You can expand from there.

"SOC 2 vs ISO 27001 — which should I get?"

| | SOC 2 | ISO 27001 | |---|-------|-----------| | Origin | US (AICPA) | International (ISO) | | Common in | US, SaaS | EU, global enterprises | | Focus | Service providers | Any organization | | Timeline | 2-4 months (Type 1) | 6-12 months | | Renewal | Annual | 3-year certification with annual audits |

Rule of thumb: US customers ask for SOC 2. EU customers ask for ISO 27001. If you only do one, match your primary market.

"How long is a SOC 2 report valid?"

SOC 2 reports cover a specific period:

• Type 1: Point in time (the day of the audit)
• Type 2: The observation period (typically 6-12 months)

Reports don't "expire" but customers typically want reports less than 12 months old. You'll need annual audits to maintain current certification.

"Can I use my SOC 2 report for multiple customers?"

Yes! That's the whole point. Unlike security questionnaires (which you fill out per customer), your SOC 2 report is a reusable asset. Complete one audit, share with unlimited prospects.

"What if we fail the audit?"

You can't really "fail" — you just get findings. Minor findings are normal and you can still get your report. Major findings might delay the report until you remediate them.

Good auditors work with you to address issues. They want you to pass (their reputation depends on it too).

The Bottom Line

SOC 2 isn't as scary as the compliance industry wants you to think. At its core:

1. It's about proving you're not careless with customer data. That's it.
2. Most of the work is documentation. Policies, evidence, proof.
3. The tools matter less than the habits. Expensive platforms don't guarantee compliance.
4. Start with readiness. Certification can come later.

If you're a seed-stage founder who just needs to answer "Do you have SOC 2?" credibly—you don't need a $50K budget. You need good policies, basic controls, and evidence that you're doing what you say.

That's exactly why we built Compliance Copilot. Your first policy in 10 minutes. Readiness before certification. Built for founders who ARE the compliance team.

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Still have questions? Topics we didn't cover? Let us know — we're building this resource based on what founders actually need to know.