Recent news reports have revealed that cybercriminals are monitoring deal flow announcements and targeting affiliated startups. Moreover, according to stats, 50% of successful cyber attacks target small businesses.
These days, cybersecurity needs to be a top priority for companies of all sizes, including startups.
While many of the classic phishing campaigns that make the news are rudimentary and rely on people’s naivete about cybersecurity, the truth is that so many more cyber attacks occur every year that you never hear about.
Brian Fritton, CEO & Founder at Havoc Shield, joined Burkland’s Startup Success to talk about how cybersecurity can impact revenue for startups, and how embracing security early can be a competitive advantage.
Cybersecurity and Revenue
Cybersecurity Builds Consumer Trust
Security is no longer just the cost center that sucks up resources. From a revenue perspective, using security as a competitive advantage is a strategic route that smart startups are taking now.
“From a revenue perspective, using security as a competitive advantage is a strategic route that smart startups are taking now.”
— Brian Fritton
The marketable assets your startup gains through a robust cyber security program are compelling. It’s much easier for customers to decide to spend money with your business when they know you’re conscious of cybersecurity and actively protect against the unique threats posed by cyber attacks.
For example, Havoc Shield customers who put trust badges on their websites and listed their security policies saw significant improvements in their conversion rates.
Cybersecurity & Enterprise Due Diligence
Strong cybersecurity is essential for closing deals with larger clients. The last thing a startup wants to see is a deal they’ve worked on for months fall apart at the finish line due to security issues, yet that is precisely what’s been happening more and more.
Often, the final step before closing a large SaaS enterprise customer is a procurement and compliance review to analyze your company’s proposed risk to the customer. One way or another, you will get questions about your cybersecurity practices.
Expect questions like: Do you train your staff? Do you have backups? What does your disaster recovery program look like? Are you actively monitoring threats?
Too often, the answer to these questions is “we have antivirus software installed,” and the deal dies. Maintaining an active and robust security policy helps startups close more deals with enterprise clients who insist these kinds of measures be in place.
What About Insurance?
Lastly, there’s the issue of ransomware insurance. Insurers have been reducing payouts and not paying at all in some cases. Today, startups bear more burden of proof and are substantially more at risk for having to pay than ever before.
A Competitive Edge
A growing number of large companies insist that smaller vendors employ cybersecurity and compliance programs. After all, smaller vendors are a part of their ecosystem—and they’re rightly seen as a soft target.
Hackers see smaller vendors as a gateway to larger businesses, which scares those businesses.
In addition, the regulatory environment has become stricter.
Due to the growth in ransomware over the last couple of years, the government has taken notice, and they—along with specific industries and licensure bodies—are now creating their own cybersecurity requirements.
The competitive edge lies in proactively propping up those cybersecurity and compliance programs now so that, unlike many of your competitors, you don’t risk losing a deal.
Why are Startups a Target for Cyberattacks?
Simply put, startups and small businesses are often targeted for cyberattacks because they’re usually more strapped for resources to combat them than their larger counterparts.
Where big companies might have dozens or even hundreds of people working in their cybersecurity team, smaller businesses and startups often have very few, if any, dedicated cybersecurity professionals.
“About 50% of the time, successful attacks target startups. So, just as much as larger businesses are attacked, so are startups.”
– Brian Fritton
That alone is a strong warning for startups. Yet as we have learned cybersecurity can prevent revenue leaks, which is critical for startups. A strong cybersecurity program also gives B2B startups a competitive advantage with enterprise customers. On the B2C side, it can provide an advantage for startups selling direct to consumers.
This discussion with Brian Fritton comes from Burkland’s podcast series, Startup Success.