How Can Startups Prevent Data Leaks and Protect Their Growth?

Have you ever wondered how your company’s reputation could be at stake if your customer’s data ends up open on the internet?  Startups are a prime target for cybercriminals, leading to data leaks and breaches.  We read about a hack that happened on the news almost daily. Data leaks in startups are more frequent as they deploy new features such as digital platforms, cloud storage, and third-party applications to scale revenue and user base. While startups are more focused on rapid growth, they often miss out on thorough testing or security integration.

A data leak occurs when sensitive information is unintentionally exposed to unauthorized sources. In the year 2024, many startups faced cybersecurity breaches, which cost them nearly ₹50 crore each.  This was a wake-up call for the entire startup ecosystem. The key reasons behind it were a lack of dedicated cybersecurity teams, a limited budget, and the adoption of cloud services without robust security frameworks. Furthermore, when there is high employee turnover and overreliance on third-party vendors, a business is further exposed to preventable data leaks.  In this blog, let’s explore how startups can effectively safeguard their data and protect their growth trajectory.

What are Data Leaks in Startups?

A data leak takes place. When sensitive business or customer information is unintentionally exposed on the Internet. This can happen through human error, technical mishaps, or poor security practices. It is not a targeted hack. But data leaks occur due to lapses such as misconfigured cloud storage, weak passwords, and an employee mishandling information. Such a mishap shakes up a startup, causing financial loss, regulatory fines, and a spoiled reputation. According to a study, the average cost of a data breach reached an all-time high in 2024 of $4.88 million, a 10% increase from 2023. These breaches are preventable with the help of proactive cybersecurity services.

Let’s understand the difference between Data Leaks and Data Breaches:

• Data leakage occurs when sensitive data is exposed accidentally due to misconfiguration or negligence.
• Data breaches are more deliberate and malicious attacks by hackers who exploit vulnerabilities to steal sensitive company data.
• Knowing the difference is the first step toward effectively protecting your startup’s data.

What Makes Startups Prime Targets for Attackers?

Startups attract the attackers for various reasons, including:

• Restricted Cybersecurity Budgets: It is mostly seen that startups have limited budgets for large security teams and enterprise-grade tools.
• Rapid Scaling: A startup that is rapidly scaling may leave security gaps in its cloud infrastructure.
• Dependence on Cloud Operations: Due to the flexibility and operational efficiency, startups rely on cloud services. But these services come with their own set of security challenges.
• High Employee Turnover: With new employees coming and going from the organization, company data can be accidentally leaked.
• Lack of Dedicated Security Team: Since security is not a core function of any business, a startup may not have a dedicated staff for it.

The Numbers Behind the Threat

• It is projected that by 2025, cybercrime will cost up to $10.5 trillion globally.
• As more startups migrate to cloud platforms for scalability and cost efficiency. But it increases the exposure to data breaches. It has been noticed that 82% of breaches involve data stored in the cloud.
• 74% of breaches in data security happen due to human errors.
• Most businesses rely on third-party vendors for critical operations, but these partners can also be potential entry points for cybercriminals. 98% of organizations have at least one third-party vendor that’s been breached.

What are the Top Reasons for Data Leaks in Startups?

Let’s break down the most common causes:

1. Cloud Misconfiguration: Misconfigured cloud environments are the biggest culprit of startup data breaches. According to Gartner, by 2025, 99% of cloud security failures will be the customer’s fault and not the cloud provider’s fault. Typical issues that arise are as follows:

• Leaving storage buckets exposed to the public.
• Exposing access keys or credentials in code repositories.
• If you fail to segment networks, you allow attackers to move freely once they enter.
• Breaches go undetected if you do not enable logging.

2. Employee Negligence: Human error is everywhere. Employees Might”

• Using weak or old passwords
• Email sensitive files to the wrong recipients.
• Falling prey to phishing attacks by giving away credentials.
• According to a report, 12% of employees took sensitive IP with them when they left an organization, including customer data, employee data, health records, and sales contracts.

3. Weak Access Controls:  start-ups. Often skip best practices such as multifactor authentication, role-based access controls, and regularly reviewing who has access to what.

4. Poor Data Encryption: If your company’s data is not encrypted, it becomes easy prey for attackers. Startups often miss encryption at rest and in transit in the rush to launch the project.

5. Lack of Cybersecurity Training: Startups must train their staff in security basics.  This can help you avoid being open to social engineering, phishing, and accidental leaks.

Real-Life Example of Startup Data Breaches by Top Companies

1. Volkswagen Group of America: Volkswagen faced a data leak in June 2021. It was attacked by a third-party vendor to obtain information about 3.3 million customers from Canada and the US. The leak included driver’s licenses and Social Security numbers. The company used this data mainly for marketing and sales purposes.

2. Infinity Insurance Company: Attackers gained access to billions of employee and customer records, including SNSs and compensation claims, in the matter of just two days.

3. Jefit: A small bug in the app allowed hackers to access over 9 million user accounts. They got access to usernames, encrypted passwords, and emails.

These attacks were not made by sophisticated attackers. Such data leaks were caused by basic errors and are easily preventable. For startups, the cost of data leaks can be fatal, leading to bankruptcy, regulatory penalties, and loss of investor confidence.

What are the Key Vulnerabilities Leading to Data Leaks in Startups?

Cloud Misconfigurations

Cloud misconfigurations happen when cloud settings, permissions, or access controls are mismanaged. It can expose sensitive data, grant excessive privileges, or create security gaps. Hence, it makes businesses vulnerable to cyberattacks.

• Attackers can gain entry from open ports.
• If the logging is disabled, you cannot spot breaches.
• Attackers often resort to leaked keys to gain unauthorized access to cloud resources.
• It is not wise to give too many permissions to users, as they may take undue advantage and cause damage to the organization.
• If the network is poorly segmented, the attackers can move laterally once they enter the system.

Weak Access Controls

• No MFA or RBAC.
• Shared or default passwords.
• No regular access reviews.

Poor Data Encryption

• Sensitive data is stored or transmitted in plain text.
• No encryption for backups or archives.

Insufficient Employee Training

• Employees are unaware of phishing tactics.
• No incident response drills.
• Lack of a security-first culture.

Top Best Practices for Startups to Prevent Data Leaks

In the wake of fierce competition and limited resources, cybersecurity often takes a backseat. We have gathered the best practices from talking to compliance experts in the cloud industry and curated them here. Let’s dive in:

1. Conduct a Comprehensive Data Audit

• Identify where sensitive data lives across the cloud, devices, and third parties.
• Map data flows and monitor for unusual access or transfers.

2. Implement Strong Access Control Measures

• Enforce MFA for all accounts.
• Use RBAC to limit access to only what’s needed.
• Regularly review and revoke unnecessary permissions.

3. Secure Cloud Infrastructure

• Regularly audit cloud settings for misconfigurations.
• Automate scanning for open ports, exposed keys, and risky permissions.
• Enable logging and monitor for suspicious activity.

4. Data Encryption and Backup

• Encrypt data at rest (AES-256) and in transit (TLS).
• Regularly back up data and test recovery processes.

5. Employee Training and Awareness

• Run security awareness programs and phishing simulations.
• Train staff on secure data handling and incident response.

6. Monitor Third-Party Vendors

• Vet vendors for security practices.
• Limit vendor access to only what’s necessary.
• Monitor vendor activity for anomalies.

7. Incident Response Planning

• Create and test an incident response plan.
• Assign roles and responsibilities for breach scenarios.
• Practice tabletop exercises to improve readiness

How Can a Cybersecurity Company Safeguard Your Startup from Data Leaks?

Startups are prime targets for cyberattacks, with approximately 43% of attacks directed toward less-funded companies. The consequences can be devastating. About 60% of startups shut down within six months of being breached. Partnering with a cybersecurity firm can not only prevent data leaks in startups but also enable safer, sustainable growth. Here’s how a cybersecurity company can protect your startup from preventable data leaks:

• Risk Assessment: Cybersecurity experts conduct thorough risk assessments to identify vulnerabilities in your systems, cloud infrastructure, and internal processes. This includes detecting cloud misconfigurations that can expose sensitive data, such as unencrypted customer records or improperly secured cloud storage.
• Security Implementation: Once vulnerabilities are identified, cybersecurity experts implement robust security measures such as firewalls, multi-factor authentication (MFA), data encryption, and advanced monitoring tools. These defenses help shield your startup against potential data breaches.
• Continuous Monitoring: Cybersecurity firms provide real-time monitoring and threat detection to catch potential breaches before they escalate. This proactive approach ensures that any suspicious activity is flagged and mitigated swiftly, reducing the risk of data leaks.
• Employee Training: Employees are often the weakest link in security. Cybersecurity firms offer tailored training programs that educate staff about common threats like phishing and social engineering, cultivating a security-first culture that minimizes the risk of human error.
• Incident Response: In the unfortunate event of a data breach, having a cybersecurity partner can significantly limit the damage. They provide immediate support, containing the breach, assessing the impact, and facilitating a swift recovery to minimize losses and maintain business continuity.
• Compliance Guidance: Startups operating in regulated industries must comply with data protection laws such as GDPR, HIPAA, or SOC 2. A cybersecurity firm can guide regulatory requirements, ensuring that your security measures align with legal standards and avoid hefty penalties.

Investing in cybersecurity for startups is not just about preventing attacks. It’s about protecting your startup’s reputation, financial stability, and future growth. By partnering with a trusted cybersecurity firm, you can focus on scaling your business without the constant worry of data breaches and leaks.

What is the Cost of Ignoring Cybersecurity?

Startups cannot ignore cybersecurity, as it can be a costly mistake. With the increasing number of data leaks in startups, 32% of cyber incidents now involve data theft. Your attackers steal and sell sensitive information instead of just encrypting it. What is more alarming is that over 40% of these breaches are detected by outsiders rather than internal teams. This shows there is a lack of effective monitoring within the system.

Additionally, more than half of breached organizations report a shortage of security staff. This is why they become more vulnerable to cyberattacks.  Startups not only face financial losses but also damage their company’s reputation, eroding customer trust and investor confidence. Cyberattacks can completely cripple a startup’s growth.

Why Startups Must Invest in Cybersecurity?

Cybersecurity is more than just a defence for startups. It plays the role of a strategic enabler for sustainable growth. Robust security measures must be in place in the wake of data leaks in startups. A company’s strong cybersecurity builds its customers’ trust and protects sensitive data. It also prevents cloud misconfigurations and keeps your transactions secure. Investors are also attracted to companies that have proven security frameworks. Cybersecurity companies reduce the risk of startup data breaches. It is equally vital to safeguard the intellectual property of a company. Data leaks in startups can expose confidential information to competitors. Thus, prioritizing cybersecurity mitigates preventable data leaks and helps startups maintain their reputation and secure their future.

Conclusion

As we’ve explored throughout this article, data leaks in startups are a fundamental threat to business growth and reputation. With the average cost of a startup data breach now nearing $5 million, and most incidents stemming from preventable data leaks like cloud misconfigurations, the stakes have never been higher. The rapid adoption of cloud services, fast-paced scaling, and limited security resources make startups especially vulnerable. Yet, these same factors also mean that a focused, proactive approach to cybersecurity for startups can yield significant protection and peace of mind.

The reality is that most data leaks in startups are avoidable. Whether it’s an open S3 bucket, a weak password, or an employee falling for a phishing email, these risks can be managed with the right strategy. Best practices-like regular cloud audits, strong access controls, robust encryption, and ongoing employee training, form the backbone of a secure startup environment. But implementing and maintaining these measures can be challenging, especially when your team is already stretched thin building and scaling your core business.

This is where partnering with a dedicated cybersecurity company makes all the difference. By leveraging outside expertise, startups can stay ahead of evolving threats, meet compliance requirements, and build trust with customers and investors. A strong security posture isn’t just about avoiding disaster’s about enabling innovation and growth without fear.

How Telepathy Can Help

At Telepathy, we specialize in cybersecurity for startups. We understand the unique pressures startups face: rapid product launches, tight budgets, and the constant need to adapt. Our mission is to make world-class security accessible and effective for every startup, regardless of size or stage.

Here’s how we empower startups to prevent data leaks and protect their future:

• Cloud and IT Audits: We thoroughly assess your cloud and IT infrastructure to identify and fix vulnerabilities, especially those caused by cloud misconfigurations. Our experts ensure your cloud storage, databases, and applications are locked down and monitored for unauthorized access.
• Access Controls and Encryption: Telepathy helps you implement industry-leading access controls, multi-factor authentication, and data encryption only the right people have access to sensitive information, and your data remains protected at all times.
• Employee Training: Your team is your first line of defense. We provide practical training to help employees recognize and avoid phishing, social engineering, and other tactics that lead to preventable data leaks.
• 24/7 Threat Monitoring: Our security operations centre monitors your systems around the clock, detecting suspicious activity and responding to incidents before they escalate.
• Rapid Incident Response: If a breach does occur, our team acts fast to contain the threat, minimize damage, and guide you through recovery. Thus, you can get back to business without missing a beat.

With Telepathy, you’re not just buying tools. You are gaining a partner who’s invested in your journey. We believe that cybersecurity for startups should be simple, scalable, and tailored to your needs. Don’t let startup data breaches or cloud misconfigurations threaten your mission. Secure your future with Telepathy’s proactive, expertized approach.

Data leaks are a real and present danger for startups, but they are not inevitable. By prioritizing security, adopting best practices, and working with a trusted partner like Telepathy, your startup can innovate and grow with confidence. Let us help you turn security from a challenge into a competitive advantage. This helps you focus on building, scaling, and succeeding.