You are raising your Series A. The term sheet is promising, due diligence is underway, and then the investor's technical advisor asks: "When was your last penetration test? Can we see the report?"
If you do not have one, the conversation gets awkward. If the report is older than 12 months, it gets questioned. If it reveals unresolved critical findings, it becomes a deal risk. Security due diligence is now a standard part of Series A evaluation for any company that handles customer data, and the penetration test report is the centerpiece of that evaluation.
Why investors care about security now
Five years ago, security was an afterthought in VC due diligence. Investors focused on market size, team quality, revenue growth, and unit economics. Security was something companies dealt with later, maybe after Series B, when enterprise customers started demanding it.
That has changed. Several factors are driving investors to include security in their evaluation criteria earlier in the funding lifecycle.
Breach liability is a portfolio risk. When a portfolio company suffers a breach, it does not just affect that company. It creates legal exposure, regulatory scrutiny, and reputational damage that can impact the fund's ability to raise its next vehicle. Investors are now evaluating security risk as part of their portfolio risk management.
Enterprise sales require security evidence. If your go-to-market strategy involves selling to enterprises, investors want to know you can actually close those deals. Enterprise procurement requires security questionnaires, pentest reports, and compliance certifications. A company that cannot produce these artifacts will hit a wall in its growth trajectory.
Security debt is expensive to fix later. Investors have learned that security problems compound. A company that defers security until after a funding round often discovers that the remediation cost is far higher than it would have been if addressed earlier. Investors prefer to fund companies that have already addressed the basics.
The investor perspective: A pentest report is a signal of maturity. It tells investors that the founding team understands that building a product and securing a product are both essential to long-term success. The absence of a report signals either naivety about security risks or deprioritization that will cost money to correct post-investment.
What investors evaluate in your pentest report
Investors and their technical advisors are not just looking for a clean report. They are looking for signals about your security maturity and your team's ability to handle security as the company scales.
Finding severity and remediation status
A report with critical findings that have been remediated and retested is actually a positive signal. It shows that you tested, found real issues, and fixed them. That is the behavior of a mature team. A report with no findings at all can raise questions about the depth of the test.
What concerns investors is unresolved critical findings, especially those related to authentication bypass, data exposure, or cross-tenant access in multi-tenant applications. These indicate fundamental security flaws that could result in a breach affecting your customers.
Scope and methodology
Investors check whether the pentest covered the areas that matter: authentication, authorization, API security, and data protection. A test that only covered the marketing site and login page is not adequate for a SaaS product. The scope should reflect the actual attack surface of the product.
Testing provider credibility
Who performed the test matters. A pentest from a recognized, independent third party carries more weight than a test performed by a friend of the CTO or an unknown firm. Investors may ask about the provider's qualifications and methodology.
Your response to findings
This is perhaps the most important factor. Investors want to see that you have a process for handling security findings: they were prioritized, assigned to developers, remediated within a reasonable timeline, and verified through retesting. This demonstrates that security is integrated into your development process, not something you do once and forget.
The pre-Series A security checklist
Beyond the pentest report itself, investors evaluate your overall security posture. Here is what you should have in place before your Series A due diligence begins.
- Recent penetration test report. Less than 12 months old, performed by an independent third party, with critical findings remediated and retested.
- Multi-factor authentication on all internal tools. Google Workspace, AWS console, GitHub, and any system with access to customer data.
- Encrypted data at rest and in transit. TLS for all connections, encryption for sensitive data in the database.
- Access controls and audit logging. Role-based access to production systems, audit trails for sensitive operations.
- Incident response plan. Even a basic document that describes how you would respond to a security incident.
- Dependency management. Evidence that you monitor and patch third-party dependencies.
- SOC 2 or ISO 27001 in progress (or planned). Not necessarily complete, but a timeline showing that compliance is on the roadmap.
You do not need to have everything perfect. Investors understand that early-stage companies have limited resources. What they want to see is awareness, intentionality, and a plan. A company that has completed a pentest, started SOC 2 preparation, and has basic security controls in place demonstrates all three.
Timing your pentest for fundraising
The ideal timeline is to complete your pentest two to three months before you plan to start fundraising conversations. This gives you time to remediate critical findings, get them retested, and have a clean report ready when due diligence begins.
If you are already in fundraising and do not have a pentest, schedule one immediately. Lorikeet Security can typically start within one to two weeks and deliver findings in real time, allowing your team to begin remediation while the test is still in progress. A completed pentest with remediation underway is significantly better than no pentest at all.
| Timeline | Action |
|---|---|
| 3 months before fundraising | Schedule and complete the penetration test |
| 2 months before fundraising | Remediate critical and high findings |
| 6 weeks before fundraising | Retest to verify remediation |
| 1 month before fundraising | Clean report ready for due diligence |
How Lorikeet Security supports fundraising startups
Lorikeet Security works with dozens of pre-Series A and Series A companies each year. We understand the unique constraints of startup fundraising: tight timelines, limited budgets, and the need for a report that communicates security maturity to investors.
Our startup pentest engagements start at $7,500 and include a comprehensive web application assessment, real-time findings delivery so your team can start remediating immediately, a compliance-ready report suitable for investor due diligence, retesting of critical and high findings, and remediation support from our team.
We also offer a startup security bundle that combines a pentest with SOC 2 readiness assessment, giving you the two most commonly requested items in Series A due diligence in a single engagement.
Raising Your Series A? Get Your Pentest Done Now
Do not let security due diligence slow down your fundraise. We work with startups every day and deliver results on the timelines that matter.
