Entrepreneurs are a rare breed who can pull ideas from air and command capital into form. When the company you started is making money, this ensures your immediate ability to present strength to future employees, create confidence in new clients, appear human to future investors, and convert all that forward and upward momentum into an Initial Public Offering (IPO).
To get there, you need funding. And to get your first round of funding, you need to tell investors the story about how you’re going to use the money they’re committing to your business. It’s a well-known fact that the more revenue you’re capable of generating, the more money you’ll be likely to raise your Series-A round and the higher your valuation is going to be.
What a lot of founders don’t focus on, however, is the key concept of how elevating trust in your business can significantly increase your first round of funding, drive bigger revenues, and tee you up for an equally successful Series-B round.
Establish legitimacy
In order to get the attention of the Venture Capital (VC) community you need to be seen as a legitimate player. Aside from creating an outstanding product, this means you need to show up to the table with at least one universally accepted compliance framework in place.
If your business handles payment information, client data, or makes and sells a product, you are going to require various types of compliance frameworks pertaining to data privacy, information security, business process compliance, and quality management. These may include: PCI, ISO 9001, ISO 2700x, SOC1, SOC2, and HIPAA – just to list some of the more common ones.
It’s now expected by regulators that companies work with a third-party risk management vendor in order to stand up to compliance audits when the time comes. This means that companies not only need to have the right compliance frameworks in place, they need to be able to pass regulatory scrutiny.
Seek guidance
It goes without saying that hiring an in-house security team is extremely expensive. On the low end, hiring a full-time Chief Information Security Officer (CISO) alone will be at least $300k plus stock. Increasingly, companies seeking an IPO are turning to engage with a subject matter expert instead—like a virtual CISO—who can provide ongoing expertise and support.
If rapid-time-to-value is a metric that matters, find a partner who can guide you through the process using one of the many tools available—a SOC2 doesn’t have to break the bank and can be done much more quickly than in the past.
Companies seeking a seal of legitimacy no longer need to spend hundreds of thousands of dollars and up to six months consulting with Big 4 audit firms, but that also doesn’t mean they should try going it alone and looking in-house to stand up to an American Institute of Certified Public Accountants (AIPCA) audit.
Empower your tribe
Providing people with the tools to succeed is crucial, and companies should deploy robust endpoint protection and management solutions when building out their security profile. Give the right people the access they need, but make sure access can be instantly revoked. To protect your IP, make sure your devices can be controlled remotely or wiped if need be.
To build trust, your business needs to put security, privacy, compliance, and transparency at the forefront of everything, period. The combination of these four factors is a surefire way to accelerate business to the ‘exit velocity’ you need to float your company at an initial public offering.
Nail down your strategy by consulting with an expert who can help you develop a robust security profile, navigate the ever-shifting regulatory and compliance landscape, and establish the legitimacy you need to build trust.
