When Should You Start Thinking About Compliance Maturity?

“Is it too early to think about compliance?”

We hear this question constantly from founders. And the answer is almost always: No, it’s not too early. But it might be too early for the type of compliance you’re thinking about.

Here’s the trap most founders fall into: They wait until they’re forced to do compliance (an enterprise customer demands it, they’re raising Series B, etc.), then they scramble. They hire someone, spend $50K+, and realize they should have started years ago.

The founders who win are the ones who understand that compliance isn’t a one-time event. It’s a journey. And the earlier you start thinking about it—even in small ways—the easier and cheaper it becomes.

This guide walks you through the compliance journey from day one, so you know exactly what to focus on at each stage.

The Compliance Maturity Curve

Compliance isn’t all-or-nothing. It’s a progression. And the stage you’re at determines what you should focus on.

Here’s the reality:

• Pre-seed/Seed: Focus on foundational practices (not formal compliance)

• Series A: Start building toward compliance (policies, basic controls)

• Series B: Pursue formal compliance (SOC 2, ISO 27001, etc.)

• Series C+: Maintain and expand compliance maturity level (multiple frameworks, audits)

  

Most founders get this wrong. They either:

1. Do nothing – Wait until they’re forced to comply, then panic

2. Do too much – Spend $100K on SOC 2 when they have zero enterprise customers

3. Do the wrong things – Build policies that don’t match their actual practices

The key is doing the right things at the right time.

Stage 1: Pre-Seed & Seed (Months 0–18)

Your focus: Foundational practices, not formal compliance.

At this stage, you have no customers (or very few). Your priority is building your product and finding product-market fit. Compliance is not your bottleneck.

But here’s what you should do:

1. Understand What Data You’re Collecting

Before you launch, ask yourself:

• What customer data are we collecting?

• Where is it stored?

• Who has access to it?

• How long do we keep it?

Why this matters: If you’re collecting personal data (emails, names, payment info, health data, etc.), you have compliance obligations from day one—even if you have zero customers.

What to do:

• Document what data you’re collecting

• Understand where it’s stored (your servers, third-party tools, etc.)

• Know who has access (you, your team, vendors, etc.)

Cost: $0 (your time)

Timeline: A few hours

2. Choose Your Data Storage Wisely

Where you store customer data matters. A lot.

Good choices:

• AWS, Google Cloud, Azure – Reputable cloud providers with strong security

• Stripe, Twilio, SendGrid – Reputable third-party tools with compliance built in

• Heroku, Vercel – Reputable hosting platforms

Bad choices:

• Storing passwords in plain text – Never do this

• Storing data on your personal laptop – Never do this

• Using unknown/sketchy third-party tools – Avoid if at all possible

Why this matters: If you choose a reputable provider from day one, you’re already ahead. If you choose poorly and have to migrate later, it’s expensive and painful.

What to do:

• Use reputable cloud providers

• Avoid storing sensitive data locally

• Use third-party tools that have compliance certifications (SOC 2, ISO 27001, etc.)

Cost: $0 (you’re already paying for hosting)

Timeline: Decision made during product setup

3. Create a Basic Privacy Policy

You need a privacy policy. Not because you’re required to (yet), but because it clarifies your practices and protects you legally.

What to include:

• What data you collect

• Why you collect it

• How you store it

• Who you share it with

• How long you keep it

• How users can request their data

How to create one:

• Use a template (iubenda, Termly, etc.)

• Customize it for your actual practices

• Have a lawyer review it (optional at this stage, but highly recommended)

Cost: $0–$500 (template + optional legal review)

Timeline: 2–4 hours

4. Document Your Security Practices

You don’t need formal policies yet. But document what you’re actually doing:

• Who has access to customer data?

• How do you manage passwords?

• Do you use MFA?

• How do you backup data?

• What happens if someone leaves the team?

Why this matters: You’re building the foundation for future compliance. When you need SOC 2 or ISO 27001 later, you’ll already have documentation of your practices.

What to do:

• Create a simple document (Google Doc is fine) describing your security practices

• Update it as your practices change

• Share it with your team

Cost: $0 (your time)

Timeline: 2–4 hours

5. Understand Your Industry’s Requirements

Are you in a regulated industry? This changes everything.

Regulated industries:

• Healthcare – HIPAA (US)

• Finance – PCI-DSS, various state regulations

• Education – FERPA (US), GDPR (EU)

• Data processing – GDPR, CCPA, various state laws

Non-regulated industries:

• SaaS – No specific regulations (but GDPR/CCPA apply if you have EU/CA customers)

• AI – Very few specific regulations yet (but emerging, such as the EU AI Act)

• B2B software – No specific regulations

What to do:

• Research your industry’s compliance requirements

• Talk to a lawyer if you’re in a regulated industry

• Understand GDPR/CCPA if you have international customers

Cost: $0–$2K (legal consultation)

Timeline: A few hours to a few days

Stage 2: Series A (18–36 Months)

Your focus: Building toward compliance. Policies, basic controls, and readiness.

At this stage, you have customers and revenue. You’re starting to get enterprise interest. Compliance is becoming a competitive advantage.

What to do:

1. Create Formal Security Policies

You need written policies that describe your security practices. Not because you’re audited yet, but because:

• Customers will ask for them

• You need them to onboard enterprise customers

• They protect you legally

• They’re required for SOC 2 later

Policies you need:

• Information Security Policy – Overall security approach

• Access Control Policy – Who has access to what

• Data Protection Policy – How you protect customer data

• Incident Response Policy – What you do if something goes wrong

• Vendor Management Policy – How you evaluate third-party tools

• Employee Security Policy – How you onboard/offboard securely

• Acceptable Use Policy – What employees can/can’t do with company systems

• Password Policy – Password requirements and MFA

• Backup and Recovery Policy – How you backup and test recovery

How to create them:

• Use templates (SANS, NIST, or compliance consultants have them)

• Customize them for your actual practices

• Have a lawyer review them (recommended)

• Share them with your team

Cost: $2K–$10K (templates + legal review)

Timeline: 4–8 weeks

2. Implement Basic Controls

Controls are the actual practices that enforce your policies. You need to implement them now.

Essential controls:

• MFA (Multi-Factor Authentication) – Require MFA for all accounts

• Password manager – Use a password manager (1Password, LastPass, etc.)

• Access reviews – Quarterly review of who has access to what

• Backup testing – Monthly or quarterly backup tests

• Encryption – Encrypt sensitive data in transit and at rest

• Audit logging – Log who accessed what and when

• Vendor assessments – Assess third-party tool security before using them

• Employee training – Basic security training for all employees

How to implement them:

• MFA: Enable in all your tools (GitHub, AWS, Google Workspace, etc.)

• Password manager: Deploy to your team

• Access reviews: Schedule quarterly reviews

• Backup testing: Test backups monthly

• Encryption: Enable in your cloud provider

• Audit logging: Enable in your tools

• Vendor assessments: Create a simple questionnaire

• Training: Annual security training (online course is fine)

Cost: $0–$5K (tools + your time)

Timeline: 8–12 weeks to fully implement

3. Understand Your Compliance Obligations

Now that you have customers, you have compliance obligations. Understand them.

Key questions:

• Do you have EU customers? → GDPR applies

• Do you have California customers? → CCPA applies

• Are you in healthcare? → HIPAA applies

• Are you handling payment cards? → PCI-DSS applies

• Are you in finance? → Financial regulations apply

What to do:

• Map your customer locations

• Understand which regulations apply

• Talk to a lawyer if you’re unsure

• Document your compliance obligations

Cost: $0–$5K (legal consultation)

Timeline: A few hours to a few days

4. Build Your Minimum Viable Evidence (MVE) Package

Start gathering evidence that you’re following your policies. This is the foundation for future audits.

Evidence you need:

• Access logs – Who accessed what systems and when

• Backup logs – When backups were performed and tested

• Training records – Who completed security training

• Access reviews – Quarterly access reviews

• Vendor assessments – Vendor security reviews

• Incident logs – Any security incidents and responses

• Change logs – Changes to systems

• Configuration documentation – How systems are configured

How to gather it:

• Enable audit logging in all your tools

• Create a spreadsheet to track access reviews

• Keep records of training

• Document vendor assessments

• Create an incident log

• Document changes

Cost: $0 (your time)

Timeline: Ongoing (start now, continue forever)

5. Plan for Formal Compliance

Start thinking about which compliance frameworks you’ll need.

Common frameworks:

• SOC 2 Type II – If you want enterprise customers

• ISO 27001 – If you want global enterprise customers or are in Europe

• HIPAA – If you’re in healthcare

• GDPR – If you have EU customers

• CCPA – If you have California customers

Decision framework:

• Do you have enterprise customers? → SOC 2 Type II

• Do you want to expand globally? → ISO 27001

• Are you in healthcare? → HIPAA

• Do you have EU customers? → GDPR

• Do you have CA customers? → CCPA

What to do:

• Identify which frameworks apply to you

• Research the requirements

• Talk to a compliance consultant

• Plan your compliance roadmap

Cost: $0–$5K (consultant consultation)

Timeline: A few hours to a few days

Pro tip: Want a head start? Map your controls to the NIST Cybersecurity Framework (NIST CSF). It’s a practical baseline that helps you organize your security efforts and makes it easier to align with any of the frameworks above when you’re ready for a formal audit.

Stage 3: Series B (36–60 Months)

Your focus: Formal compliance. SOC 2, ISO 27001, HIPAA, etc.

At this stage, you have significant revenue and enterprise customers. Compliance is now a revenue driver—customers are asking for it.

What to do:

1. Pursue SOC 2 Type II

If you have enterprise customers, you need SOC 2 Type II.

Timeline: 9–18 months (6–12 month observation period)

Cost: $20K–$50K

What to do:

• Hire a SOC 2 auditor

• Complete the preparation phase (2–4 months)

• Start the observation period (6–12 months)

• Complete the final audit (2–4 weeks)

See our detailed guide: “How to Prepare for a SOC 2 Audit (Step-by-Step)”

2. Pursue ISO 27001 (If Applicable)

If you want to expand globally or have European enterprise customers, consider ISO 27001.

Timeline: 6–12 months

Cost: $15K–$40K

What to do:

• Hire an ISO 27001 auditor

• Implement the ISO 27001 control framework

• Complete the audit

3. Pursue HIPAA (If Applicable)

If you’re in healthcare, you need HIPAA compliance.

Timeline: 6–12 months

Cost: $20K–$50K

What to do:

• Hire a HIPAA consultant

• Implement HIPAA controls

• Complete a HIPAA audit or risk assessment

4. Build a Compliance Team

At this stage, you might need a dedicated person (fractional or full-time) to manage compliance.

Options:

• Fractional vCISO – Part-time security officer ($3K–$10K/month)

• Full-time compliance officer – Full-time employee ($120K–$200K/year)

• Compliance consultant – Ongoing support ($5K–$20K/month)

Decision framework:

• Do you have 40+ hours/week of compliance work? → Hire full-time

• Do you have 10–40 hours/week? → Hire fractional vCISO

• Do you have <10 hours/week? → Use a consultant

5. Expand Your Compliance Program

As you grow, expand your compliance program:

• Add more policies and controls

• Implement vendor risk management

• Build an incident response team

• Create a security awareness program

• Establish a compliance committee

Stage 4: Series C+ (60+ Months)

Your focus: Maintaining and expanding compliance. Multiple frameworks, continuous improvement.

At this stage, you have significant revenue, many enterprise customers, and possibly international operations. Compliance is a core part of your business.

What to do:

1. Maintain Existing Compliance Maturity Level

• Annual SOC 2 audits

• Annual ISO 27001 audits

• Continuous HIPAA compliance

• Ongoing GDPR/CCPA compliance

2. Add New Compliance Frameworks

As you expand into new markets or industries, add new frameworks:

• HITRUST (healthcare)

• FedRAMP (government)

• PCI-DSS (payment processing)

• GDPR (EU expansion)

• CCPA (California expansion)

Tip: Base your framework decisions on your business model, location, and—most importantly—the needs and expectations of your customers.

3. Build a Dedicated Compliance Team

• Chief Information Security Officer (CISO)

• Compliance Manager

• Security Engineer

• Privacy Officer

4. Implement a Compliance Management System

Use a compliance management platform to track policies, controls, evidence, and audits:

• Drata – SOC 2, ISO 27001, HIPAA

• Vanta – SOC 2, ISO 27001, HIPAA

• Workiva – Enterprise compliance

• AuditBoard – Audit and compliance management

The Decision Framework: When Should You Start?

Start thinking about compliance now if:

• You’re collecting customer data (any stage)

• You’re in a regulated industry (healthcare, finance, etc.)

• You have EU customers (GDPR applies)

• You have California customers (CCPA applies)

• You want enterprise customers (they’ll ask for compliance)

You can wait if:

• You have zero customers

• You’re not collecting sensitive data

• You’re not in a regulated industry

• You have no international customers

• You’re not pursuing enterprise deals

But here’s the truth: Even if you can wait, you shouldn’t. Starting early—even in small ways—saves you time and money later.

The Cost of Waiting

Let’s say you wait until Series B to think about compliance. Here’s what happens:

• You realize you need SOC 2

• You hire an auditor ($20K–$50K)

• You realize your policies are weak

• You realize you have no evidence

• You realize you have to rebuild your entire security program

• You spend 12–18 months and $50K–$100K to get compliant

Now imagine you started at Series A:

• You built policies gradually ($2K–$10K)

• You implemented controls gradually ($0–$5K)

• You gathered evidence gradually ($0)

• When you need SOC 2 at Series B, you’re 80% done

• You spend 6 months and $30K–$50K to get compliant

The difference: You save 6 months and $20K–$50K by starting early.

The Bottom Line

Compliance isn’t a one-time event. It’s a journey. And the earlier you start—even in small ways—the easier and cheaper it becomes.

Here’s what to do at each stage:

• Pre-seed/Seed: Understand your data, choose storage wisely, create a privacy policy, document practices, understand your industry

• Series A: Create formal policies, implement basic controls, understand your obligations, build your MVE package, plan for formal compliance

• Series B: Pursue SOC 2, ISO 27001, HIPAA (as applicable), build a compliance team, expand your program

• Series C+: Maintain compliance, add new frameworks, build a dedicated team, implement a compliance management system

Don’t wait until you’re forced to comply. Start now. Your future self will thank you.

Ready to Build Your Compliance Roadmap?

If you’re not sure where to start, or if you want help building a compliance plan for your stage, let’s talk. We help founders understand their compliance obligations and build a roadmap that fits their stage and budget.

Schedule a call with Lodestone →

We’ll help you understand what you need now, what you can wait on, and how to build compliance gradually—without breaking the bank.

FAQ

Q: Is it really too early to think about compliance at pre-seed?

A: No. Even at pre-seed, you should understand what data you’re collecting and where you’re storing it. These foundational decisions save you time and money later.

Q: Do I need formal policies at Series A?

A: Yes. Customers will ask for them, and you need them to onboard enterprise customers. They also protect you legally.

Q: When should I hire a compliance officer?

A: When you have 40+ hours/week of compliance work. For most Series A companies, a fractional vCISO is the right choice.

Q: Do I need SOC 2 at Series A?

A: Not necessarily. But you should be building toward it. If you have enterprise customers asking for it, pursue it. Otherwise, wait until Series B.

Q: What if I’m in a regulated industry?

A: Start compliance work earlier. Talk to a lawyer about your specific obligations.

Q: Can I do compliance on my own?

A: Yes, but it’s harder. A consultant or fractional vCISO can guide you and save you time.

Q: How much does compliance actually cost?

A: It depends on your stage and industry. Pre-seed: $0–$2K. Series A: $5K–$20K. Series B: $30K–$100K. Series C+: $100K+/year.

Q: What’s the biggest mistake founders make?

A: Waiting too long. They wait until they’re forced to comply, then panic and spend way more than necessary.

Q: Should I use a compliance management platform?

A: At Series A, probably not. At Series B+, yes. Platforms like Drata and Vanta make compliance easier and cheaper.

Interested in a platform? Lodestone partners with GRC and Privacy platforms and can help you choose the best fit and help get you connected and/or set up.

Q: What if I’m not sure which frameworks apply to me?

A: Talk to a lawyer or compliance consultant. It’s worth the investment to understand your obligations upfront.

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