What is SOC 2?

A startup founder's guide to security compliance and customer trust
June 23, 2024

As a startup founder, you're likely focused on building your product, acquiring customers, and growing your team. But if you're handling customer data, you need to be aware of SOC 2 compliance.

What is SOC 2?

SOC 2 is a voluntary compliance standard developed by the American Institute of Certified Public Accountants (AICPA) that focuses on how organizations manage and protect customer data.

Why Should Startups Care About SOC 2?

If you're storing customer data, you'll likely undergo vendor reviews that assess your security posture. This may include:

  • Security questionnaires
  • Compliance and penetration testing reports

Prioritizing SOC 2 compliance early offers several advantages:

  1. Competitive edge: Many startups overlook compliance initially, so you can stand out.
  2. Easier implementation: It's a multi-month process that becomes more challenging the longer you wait.
  3. Scalability: Building compliant systems from the start is easier than retrofitting later.

You don't want to be stuck in a situation where the customer likes your product but their security team blocks your product because you're not SOC 2 compliant.

Illustration of a person stuck in a spinning cycle

What's the difference between SOC 2 Type 1 and Type 2?

As a startup handling customer data, understanding the difference between SOC 2 Type 1 and Type 2 audits is crucial. Let's break it down in simple terms:

SOC 2 Type 1

  • Point-in-time assessment of control design
  • Shorter duration (1-2 months)
  • Auditors may often just test your policies.

SOC 2 Type 2

  • Evaluates control effectiveness over time (3-12 months)
  • Tests how well your controls actually work in practice over time by asking you for populations and testing a subset of them
  • Required by many enterprise customers.

You don't actually need to do a Type 1 to get started. You can do a Type 2 right away!

Getting Started with SOC 2 Compliance

  1. Choose a compliance automation platform: Consider options like Vanta or Drata to streamline the process.
  2. Implement key controls and policies: Focus on essential security practices.
  3. Set up vendor integrations: Ensure your tools and services are compliant.

This blog is also a good overview of what is required to get started from an implementation standpoint. It might be outdated, but the general process is the same. I will work on an updated version of this soon, but until then, you can use this as a good starting point.

Key considerations:

  • Engage an auditor early, even before reaching 100% framework completion. (This is very common)
  • Expect ~2 weeks for fieldwork and ~1 month for final report delivery.
  • It will probably take your company 1-2 months to prepare for a Type 1, depending on your background.
  • Choose your auditor carefully, considering reputation, lead times, and pricing.
  • If using a compliance platform, ask for auditor recommendations familiar with their system.
  • Start with SOC 2 in mind if you're a B2B SaaS company to ensure timely reporting.