Top 5 security mistakes startups make and how to avoid them

Startups have a lot of ground to cover, with funding, hiring, growth, product development, and legal compliance all competing for attention. However, they should not neglect security. Cyberattacks and other forms of breaches can have devastating effects on companies of any size, and the range and sophistication are constantly evolving. Startups must build strong security foundations from the start by avoiding these common mistakes.

1. Failing to adequately train employees

Employees are the first line of defence against threats. Effective use of the many great security tools available today depends on having competent, well-trained employees.

Employees must be consistently retrained to deal with new threats. Even if a group of employees previously received comprehensive cybersecurity training, that knowledge is now outdated. Training from years past is unlikely to have covered the extensive dangers AI poses today, such as the quality of deepfakes people can now produce.

A 2025 report found that 59% of small and medium-sized enterprises had experienced cyberattacks in the previous 12 months. Even basic training can equip employees with the knowledge to spot the signs of these attacks before they occur.

2. Using weak password policies

Password security has been one of the most common weaknesses in organisations, particularly startups, since the early days of the internet. Today, many companies still neglect to implement a password policy strong enough to deter modern attack strategies seeking to gain access to sensitive information.

Password managers are currently only used by 30% of employees, but they are a fantastic way to generate, encrypt and store high-quality passwords in a digital vault. Startups should also ensure their employees don’t reuse work passwords on any other devices, especially personal ones outside of work.

3. Ignoring shadow AI and shadow IT usage

Shadow IT refers to when an employee uses tools or software that their leaders haven’t approved. Similarly, shadow AI is when employees use large language models or other forms of AI outside their company’s knowledge. These have become much more common in recent years with the rise of remote working.

Shadow AI and shadow IT can both cause serious issues. Attackers can extract sensitive company data entered by employees into insecure AI tools. Unauthorised Cloud services employees use to save their work are also targeted.

Startups should educate employees on the risks of shadow AI and shadow IT. They should also consider implementing a secure, company-approved AI tool and monitoring software for remote teams.

4. Lacking a sufficient incident response plan

Security breaches can have devastating effects on a company, and attackers may try to extort large sums to prevent the release of information. Verizon’s 2025 Data Breach Investigations report showed that 99% of bad actors’ motives are financial when targeting small businesses.

The reality is that criminals and malicious actors have many ways to harm a company. A startup, in particular, must be prepared. Don’t make the mistake of thinking that only large companies are targeted.

Startups must consider the bespoke security concerns their company faces, rather than drawing up a generalised plan or copying one from another company that may have different needs. Consider routinely contacting a security audit service, as a professional inspection can give you peace of mind that you have covered all bases.

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5. Giving too many employees access to sensitive data

Granting employees access to sensitive information is always a risk, regardless of how trustworthy they may seem. People love to chat about interesting topics with friends, family and colleagues, and how a company handles things like cybersecurity in the AI era is a topic that many people are interested in.

The employee may have good intentions, but there’s no guarantee that those they speak to outside of work will. An employee who handles security may also use that knowledge to land a job with a different company down the line and potentially share what they did at your company to help their new employer.

Startups with only a few employees may find it harder to keep information from their employees, as the chain of command is often less defined. However, it’s imperative that startups treat sensitive information and data as confidential. Consider asking employees to sign NDAs.

Strong startup security from day one

Startups must approach security proactively from day one to build strong foundations. Having a solid, regularly updated security base will make attacks as rare as possible and ensure that an adequate plan is in place in the event of an incident.