Cybersecurity Pitfalls to Avoid in Fundraising and Due Diligence

Prague, Czech Republic - September 27, 2025

How startups can avoid losing investor trust through preventable security oversights

When startups enter fundraising rounds, most focus on revenue, growth metrics, and market share. Yet investors are increasingly evaluating another factor: cybersecurity maturity. Poor security practices can delay or derail deals, as investors worry about data breaches, compliance gaps, or future liabilities.

The first pitfall is incomplete documentation. Many startups lack a clear security policy, incident response plan, or compliance roadmap. During due diligence, this absence signals immaturity and raises red flags for institutional investors. Without documentation, founders must scramble to prove they have adequate safeguards in place.

A second pitfall is weak identity and access management. Overly broad admin rights, missing multi-factor authentication, or shadow accounts are frequently uncovered during audits. These flaws suggest that sensitive data may already be at risk and that security hygiene is not enforced at scale.

Another common issue is untested compliance claims. Startups often assert GDPR or SOC 2 readiness without having completed audits. Once investors dig deeper, discrepancies emerge, damaging credibility. Early engagement with compliance partners and pre-audit readiness reviews prevent such missteps.

"In due diligence, security gaps can weigh heavier than missed revenue targets. They point to structural weaknesses," said Daria Fediay, Chief Executive Officer at CypSec.

Neglected vendor and partner risks are also problematic. Modern startups rely heavily on SaaS providers, cloud platforms, and outsourcing. If third-party risks are not documented and managed, investors perceive an uncontrolled exposure that could undermine the business model.

CypSec's co-founder and chief executive officer, Daria Fediay, did not study cybersecurity at university. Instead, she graduated with a Bachelor's degree in finance and was part of two of the Big Four, focusing on auditing, venture capital and private markets. In CypSec's early days, she researched about corporate compliance herself in the evenings. Even though CypSec is a security startup, it still needed to embed controls into workflows to generate evidence that withstands regulatory scrutiny.

Within Tech Leaders Mastermind, founders like Daria share lessons learned from fundraising rounds, startup live and regulatory compliance. CypSec is taking an active stance in the community, showing how startups can present themselves as trustworthy, resilient, and scalable partners.

Ultimately, security is not just a technical matter but a governance issue. Investors want assurance that leadership takes data protection seriously, not only to safeguard current assets but also to protect future growth. Startups that actively address these pitfalls differentiate themselves in competitive fundraising environments.

About Tech Leaders Mastermind: Tech Leaders Mastermind is an exclusive community for CTOs, engineering leaders, and founders. It provides peer exchange, deep-dive sessions, and curated insights to help leaders scale technology and teams effectively. For more information, visit techleadersmastermind.com.

About CypSec: CypSec delivers enterprise-grade security solutions including policy-as-code, active defense, and compliance frameworks. It helps startups build investor confidence by embedding security into operations. For more information, visit cypsec.de.

Media Contact: Daria Fediay, Chief Executive Officer at CypSec - daria.fediay@cypsec.de.