SOC2 vs ISO 27001: Which Does Your Startup Need First?
The question comes up in almost every enterprise sales deal: "Are you SOC2 compliant? ISO 27001 certified?" If you're a seed or Series A startup trying to close your first $50k enterprise contract, this is the question that stalls deals.
Both SOC2 and ISO 27001 are legitimate security frameworks, but they were designed for different purposes, different markets, and different stages. Choosing the wrong one wastes 6–12 months and $30k–$100k. Here's how to choose the right one.
What Each Framework Actually Proves
Before comparing them, understand what each certification is actually attesting.
Note on SOC1: SOC 1 (formerly SAS 70) covers controls relevant to financial reporting — primarily used by payroll processors, benefits administrators, and payment platforms. If your product sits in a financial data flow, enterprise customers may request both a SOC 1 and SOC 2 report. For most B2B SaaS companies, SOC 2 is the relevant starting point.
SOC2 (System and Organization Controls 2) is an American auditing standard created by the AICPA. It evaluates your internal controls against one or more of five "Trust Service Criteria": Security, Availability, Processing Integrity, Confidentiality, and Confidentiality. The output is an auditor's report — a formal opinion letter — not a certificate.
The key distinction: SOC2 is principles-based. There is no prescriptive list of 114 controls you must implement. The auditor looks at whether your controls are suitably designed (Type I) or operating effectively over a period of time (Type II) against the Trust Service Criteria. This gives you flexibility, but it also means two companies can have SOC2 reports with dramatically different actual security postures.
ISO 27001 is an international standard (ISO/IEC 27001:2022) that specifies requirements for an Information Security Management System (ISMS). It's a formal certification issued by an accredited certification body (not an auditor). Annex A of the standard lists 93 controls across 4 domains (organizational, people, physical, technological). You don't have to implement all 93 — you document which ones apply and why you've excluded others in a Statement of Applicability (SoA).
The key distinction: ISO 27001 is process-based. Auditors are checking that your ISMS — the documented system of policies, risk assessments, and processes — is established, implemented, maintained, and continually improved. The certificate is publicly verifiable and globally recognized.
Who Actually Requires Each
This is the most practical filter for deciding which to pursue first.
SOC2 is required (or strongly expected) by:
- US enterprise customers, especially in tech, SaaS, and financial services
- Healthcare companies (HIPAA-covered entities) integrating third-party tools
- Cloud-infrastructure vendors (AWS ISV programs, Azure Marketplace requirements)
- US government procurement (increasingly expected, though FedRAMP is its own beast)
- US-based VC due diligence checklists
ISO 27001 is required (or strongly expected) by:
- European enterprise customers and government contracts (GDPR alignment is assumed)
- UK public sector contracts (many mandate Cyber Essentials + ISO 27001)
- Any enterprise in Germany, Netherlands, France, Nordics — it's the default there
- Middle East and Southeast Asian enterprise deals
- Global enterprise customers who want a single internationally-recognized certification
The brutal truth: if your customer base is primarily US SaaS companies, SOC2 will unblock more deals faster. If you're selling to European enterprises, ISO 27001 will be required before SOC2 is even mentioned.
Timeline and Cost Comparison
| | SOC2 Type I | SOC2 Type II | ISO 27001 | |---|---|---|---| | Duration | 2–4 months | 6–12 months | 6–12 months | | Renewal | Not required | Annual | Annual surveillance + 3-year recertification | | Cost (DIY + auditor) | $15k–$40k | $30k–$80k | $25k–$60k | | Cost (with compliance platform) | $25k–$60k | $50k–$120k | $35k–$80k | | Output | Auditor report | Auditor report | Certificate | | Auditor type | CPA firm | CPA firm | Accredited certification body | | Geographic recognition | Primarily US | Primarily US | Global |
One thing founders consistently underestimate: the ongoing cost. SOC2 Type II requires continuous evidence collection (logs, access reviews, change management records) throughout the audit period, which is typically 6–12 months. ISO 27001 requires annual surveillance audits and documented management reviews. Both require you to maintain the security practices year-round, not just at audit time.
The Technical Difference That Matters
SOC2 and ISO 27001 overlap significantly in the underlying controls they encourage, but the mechanism differs in ways that affect how you build your compliance program.
SOC2 Type II evidence requirements are artifact-heavy. For every control, you need to prove it operated effectively throughout the audit period. This typically means:
- Access logs showing least-privilege reviews happened quarterly
- Change management tickets showing approval before production deploys
- Vulnerability scan reports with remediation timelines
- Vendor risk assessment records
- Incident response records (even if no incidents occurred — you need to prove the process runs)
The auditor isn't checking a checkbox; they're sampling your evidence to conclude whether the control was consistently operating.
ISO 27001 is documentation-heavy. The ISMS requires:
- A documented risk assessment methodology and risk treatment plan
- An information security policy approved by leadership
- A Statement of Applicability mapping your controls to Annex A
- Objectives for the ISMS with measurement criteria
- Internal audit results and management review records
For a 10-person startup, maintaining a proper ISMS can feel like building a compliance bureaucracy. But the upside: once the ISMS is established, it's a living document system that scales. Many larger companies find ISO 27001 easier to maintain than SOC2 at scale because it's process-driven rather than evidence-sampling-driven.
VAPT and Security Testing Frameworks
Both SOC2 and ISO 27001 expect evidence of systematic vulnerability management. A Vulnerability Assessment and Penetration Test (VAPT) — structured around the OWASP Top 10 for web application coverage and NIST Cybersecurity Framework (NIST CSF) Identify/Protect/Detect functions — satisfies auditor expectations for both frameworks simultaneously. Running VAPT as an automated CI/CD workflow (scheduled dynamic scans + annual manual pentest) means you accumulate evidence continuously rather than scrambling before each audit cycle.
The Decision Framework
Work through these questions in order:
1. Where are your next 5 enterprise deals located?
- Mostly US → SOC2
- Mostly EU/UK/international → ISO 27001
- Mix → SOC2 first, then ISO 27001 (they share 70% of underlying controls, so the second is faster)
2. What does your deal blocker actually say? Look at the security questionnaire you failed. If it says "SOC2 Type II report" or "CPA audit," that's SOC2. If it says "ISO 27001 certificate" or "ISMS," that's ISO. Don't guess — ask the prospect's security team what they'll actually accept.
3. What's your timeline? If you need to close a deal in the next 3 months, SOC2 Type I is the only realistic option. ISO 27001 and SOC2 Type II both require 6–12 months minimum. Don't promise either to close a deal if you haven't started.
4. Are you subject to other frameworks? If you handle healthcare data → HIPAA + SOC2 is a common pairing. If you process EU personal data → GDPR + ISO 27001 makes sense. If you're targeting US government → FedRAMP eventually, SOC2 as a stepping stone. If you handle payment card data → PCI-DSS is its own track, though SOC2 TSC overlap is significant.
5. What's your actual engineering capacity? Both frameworks require someone to own the compliance program. SOC2 requires continuous evidence collection (tooling helps enormously). ISO 27001 requires document maintenance and internal audits. If you have no one dedicated to this, a managed compliance service will save you more than it costs.
Doing Both Isn't Crazy
For startups selling to both US and European enterprise, the answer is often "both, starting with SOC2 Type I." Here's why:
SOC2 Type I can be achieved in 2–4 months and unblocks US deals immediately. Then you use the 6-month Type II observation window to simultaneously build toward ISO 27001. Since both frameworks require similar underlying controls (access control, encryption, incident response, vendor management, change management), you're not building two separate programs — you're building one security program with two audit tracks.
The smart sequencing: SOC2 Type I → SOC2 Type II (6-month observation) → ISO 27001 initial certification → both maintained annually.
The total incremental cost of adding ISO 27001 after SOC2 is typically 30–40% of doing ISO 27001 from scratch, because the controls are largely in place.
What 100x Engineering Does Differently
Most compliance platforms (Vanta, Drata, Secureframe) give you software and leave you to figure out the rest. They're excellent at automating evidence collection, but they don't help you actually implement the security controls — they just track whether you have.
If your engineering team doesn't have the time or bandwidth to stand up a proper incident response process, run access reviews, configure your cloud environment to pass the audit criteria, and maintain evidence continuously — the software won't solve that.
We work with startups to implement the actual security controls, configure the tooling, train the team, and get audit-ready — then hand off a running compliance program. It's the difference between buying gym equipment and having a trainer who shows up three times a week.
If you're staring at a compliance requirement and wondering where to start, book a 30-minute scope call. We'll tell you exactly which framework you need, what you already have, and what's blocking your audit.
Related Resources
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- Pre-Launch SOC 2 Foundation for AI Startups
- Fintech SOC 2 Type II in 3 Weeks
- Healthcare SaaS: HIPAA + SOC 2 Compliance
Our solution: Security & SOC 2 Compliance Engineering
Glossary:
Comparisons:
- In-House vs Agency AI Development
- Build vs Buy AI MVP
- Vanta vs Drata vs 100x.ai: Which Compliance Approach is Right?
Free Tool: Not sure which framework to start with? Check your SOC2 readiness first. → SOC2 Readiness Assessment