When a founder prepares to raise a round, most of the time goes into polishing the pitch, organizing business metrics, and anticipating questions about the growth model. Security, on the other hand, is rarely on that list.
However, technical due diligence is no longer a formality reserved for large rounds. More and more funds, even at seed and Series A stages, are incorporating a security review as part of their decision process.
It's not that VCs are turning into cybersecurity experts. It's that they've learned, often the hard way, that a startup with unresolved critical vulnerabilities is a startup with hidden risk in its valuation.
Why does an investor care about your security?
From a fund's perspective, investing in a startup means buying a stake in an asset expected to grow in value. A serious security incident can destroy that value overnight.
A data breach can mean lost customers, lawsuits, regulatory penalties, and in the worst case, the inability to raise the next round because no investor wants in after a public incident.
For a fund, evaluating a startup's security before investing is simply managing the risk of its own portfolio.
What VCs typically review
The depth of the review varies depending on the round size and the sector, but some questions come up with increasing frequency:
- Has the startup run any pentest or security assessment in the last 12 months?
- How is user and customer data managed?
- Are there clear policies for access and credential management?
- Is there a defined process for responding to a security incident?
- Does the technical team have full visibility into their infrastructure and exposed assets?
Most of these questions don't expect a flawless security product or a full-time in-house security team, which wouldn't be realistic for an early-stage startup. They're looking for evidence that the founding team takes security seriously and has processes, even simple ones, to manage it.
The cost of showing up unprepared
When a startup can't answer these questions clearly, it doesn't automatically mean the deal falls through. But it usually translates into:
- Longer, more exhausting due diligence rounds.
- Additional conditions imposed by the fund before closing.
- Loss of negotiating power on valuation.
- In the worst cases, the investor walking away from the deal.
None of these consequences are necessary if security is addressed ahead of time, instead of improvising a response once the fund is already asking questions.
Getting ready doesn't require an in-house security team
The good news is that being prepared for this kind of due diligence doesn't depend on hiring a full security team, something most early-stage startups simply can't afford.
It depends on having concrete, up-to-date evidence: a recent pentest report, a clear inventory of exposed assets, and a minimal vulnerability management process that shows findings are being prioritized and fixed.
That evidence is exactly what turns the security conversation with an investor from a red flag into a sign of the founding team's maturity.
About Krill Security
At Krill Security, we help startups arrive prepared for their due diligence processes through continuous security assessments, prioritized vulnerability management, and clear reports that can be shared directly with investors.
Because security, when addressed on time, stops being a risk to your next round and becomes one more argument in your favor.