Executive imperatives for 2026: How SaaS founders should build compliance into their funding pitch
Executive imperatives for 2026: How SaaS founders should build compliance into their funding pitch
SaaS startups are one of the largest recipients of investment, with Semrush reporting nearly 50% of all venture capital going to these types of businesses in 2023. However, as reported by the Wall Street Journal with data from Pitchbook, funding to venture capital firms dropped 35% in 2025. With less funding available for startups, SaaS companies need to put in extra effort to stand out to investors.
Compliance infrastructure is becoming a trust signal for investors, indicating that a company has ensured its software and business are in line with tax regulations, data privacy laws, industry certifications, and financial controls. Anrok provides a comprehensive compliance playbook that Saas companies can follow as they navigate the increasingly difficult funding landscape.
Designing a compliance maturity framework: From startup to fully funded
Compliance infrastructure is well-defined, making it straightforward for SaaS founders to develop an actionable framework. There are five general pillars, according to Baker & McKenzie:
- Leadership roles
- Risk assessment models
- Implementation of standards and controls
- Ongoing training and communication
- Audits and reports
Establishing these pillars and having evidence can take a company further during investment talks. Venture capitalists are increasingly looking for trustworthy companies, and this mostly comes down to compliance. Data security is one of the top priorities, according to TechCrunch, and other priorities include sales tax compliance, especially when a software company offers its services in many different states.
Stage-based compliance
Compliance infrastructure goes through various stages as a company grows. 360 Advanced suggests that there are four:
- Stage 1 — Reactive: Most companies develop compliance out of reactivity to a problem. An issue arises where they realize they need to have an actionable system.
- Stage 2 — Repeatable: Once systems are designed, they start to become repeatable. Processes are created that everyone can follow.
- Stage 3 — Optimized: Once processes are developed, they are optimized and made more efficient. This allows Saas companies to scale at this stage.
- Stage 4 — Strategic: In the final stage, compliance becomes an asset to a company, not just an inconvenience.
Why investors care
Most investors have a due diligence checklist they run through when determining a startup's viability. Compliance is always on it. While each investor will have their own criteria, they will at least want to see that a SaaS company has implemented measures to ensure sales tax collection and data privacy. Mergewave outlines four general categories for due diligence: financial, operational, technical, and legal.
Red flags that send investors running
In a competitive landscape, SaaS companies need to stand out from the competition. Using data from the Dealum platform, the Angel Capital Association found that only 3% of applications in the pre-seed round get funding. There are a few key compliance red flags that turn investors off:
- Financial compliance landmines: Many SaaS companies fail to register for sales tax in the economic locations where they do the most business. They also don’t track where sales come from.
- Data security and privacy violations: Various violations, such as storing customer data without encryption or collecting it without permission, are huge concerns for venture capitalists.
- Intellectual property failure: Forgetting trademarks and misusing open source code under license terms can be a mistake for founders seeking funding.
Building compliance infrastructure: 5 phases to follow
Building compliance so that it’s an embedded part of a software company is possible. Here is a five-phase plan:
Phase 1: Legal foundations
The groundwork needs to be laid before a SaaS can start thinking about funding. Securing trademarks, obtaining patents, creating terms of service, and writing contracts should all be complete before proceeding.
Phase 2: Financial controls
Sales tax compliance needs to be established to ensure that the correct amount of tax is being collected based on nexus locations. Financial records also need to be established so that they meet accounting standards like ASC 606.
Phase 3: Data security architecture
Once legal and financial foundations are set, SaaS companies need to design a data privacy architecture to ensure that they’re compliant with regulations like the California Consumer Privacy Act.
Phase 4: Industry certifications
Industry certifications should also be pursued. For example, SaaS companies in the health care space need to be compliant with the Health Insurance Portability and Accountability Act. SaaS companies in the HVAC space may need to be compliant with standards like Manual J.
Phase 5: Documentation and audit trails
Finally, clear processes must be set for ongoing documentation and audits. There needs to be a clear paper trail of all transactions so that the company can be compliant with anti-money laundering regulations.
Pitch deck time: How to showcase compliance readiness
SaaS founders need to be ready when it comes time to pitch to investors. Demonstrating compliance across all five pillars will impress, build confidence, and gain rapport with the venture capital team.
EOXS suggests building a narrative story that demonstrates the compliance process, complete with transparency about challenges faced. Defining leadership roles, risk assessment models, standards and controls, training, and audits should all be naturally woven into the pitch to have the most impact.
Key metrics include the time it took to get to compliance, how frequently risk assessments are done, and what current audits have found. Visual representations are a crucial asset to help investors understand growth.
Documentation and disclosure frameworks
Standardized documentation is essential for improving an investor pitch. It creates an organized framework that can be followed, referenced, and verified. This is also useful outside of the boardroom, as all companies need to keep detailed records of their accounting, business structure, and compliance reports.
Data room organization
Data rooms are a hierarchy of files that can be easily accessed by investors. It’s organized so that all necessary filings can be quickly found during review. Documents can include business filings, tax and financial statements, intellectual property documentation, regulatory records, and legal agreements.
WGULabs notes it can also be used to hold the pitch deck, team bios, and other qualitative data. The key idea is to make one central repository for investors to find all the information they need.
Essential document checklist
Here are just a few essential documents that should be included with every pitch deck:
- Articles of Incorporation
- Bylaws
- Shareholder documentation
- Historical financial statements
- Financial projections
- Tax filings
- Capitalization history
- Intellectual property filings
- Compliance policies
- Risk assessments
- Insurance policies and coverage
Disclosure documents
It’s helpful to include disclosure documents with all pitch decks so that investors have an understanding of the company’s risks. Investors rely on these documents as a “buyer beware” measure, according to the Washington State Department of Financial Institutions. SaaS companies are obligated to accurately describe any extenuating variable that may affect the valuation of a company.
Understanding what investors actually verify: Insights from CFOs
Chief financial officers have unique insights into what investors actually verify, and their advice can be valuable for SaaS companies seeking funding. Within a startup organization, the CFO is typically responsible for providing this information during the pitch:
Major due diligences
CFOs are aware of the extensive due diligence lists that venture capitalists follow when evaluating a startup. According to Qubit, investors spend hours upon hours researching the financials of a company, evaluating their risk, room for growth, and potential return on investment.
Their due diligence checklist will include surface-level details like the company profile and industry fit, but they’ll also do a deep dive on the financials and compliance paperwork.
Tax compliance
Investors will take a very close look at a SaaS’s tax compliance, particularly if they’re collecting sales tax in the municipalities they operate in. Software services are considered taxable in many states and it’s important that companies have frameworks set up for this.
Using virtual CFOs
Many SaaS startups do not have a veteran-level CFO who can navigate the complex requirements of venture capitalists. Instead, they often hire virtual CFOs to assist with the process. As described by BCL, virtual CFOs can provide:
- Investor-grade visual models
- Due diligence preparation
- Tax compliance assistance
- Board and governance readiness
- Coaching
Industry-specific compliance considerations
Many industries have specific compliance standards. SaaS companies should be fully aware of these standards and ensure that they have them fully implemented before seeking outside investment. Examples include:
- Fintech and financial services: Financial Industry Regulatory Authority, Securities and Exchange Commission, General Data Protection Regulation, California Consumer Privacy Act
- Healthcare services: Health Insurance Portability and Accountability Act, Federal Drug Administration, Joint Commission Standards
- AI and emerging technology: National Institute of Standards and Technology Risk Management Framework, General Data Protection Regulation, California Consumer Privacy Act
90-day compliance plan: From audit to funding rounds
A defined 90-day plan can help SaaS investors get ready for the boardroom. This type of plan will require the collaboration of many people in the organization, including financial professionals, developers, and business operations specialists.
Weeks 1 and 2: Compliance audit
The first two weeks should be spent identifying gaps in compliance and regulation. This is crucial for developing a future plan that makes the company ready to present to investors.
Weeks 3 and 4: Documentation and quick wins
Based on the information found in the first two weeks, quick changes can be made to easily fix compliance issues. This could include an employment agreement and two-factor authentication for software.
Clear documentation processes should begin here, paving the way for new policies to be developed.
Weeks 5 through 8: Infrastructure implementation
At the start of the second month, the company should be ready to begin putting in actual compliance infrastructure. This usually involves actions like implementing compliance tools for tax regulation, accounting, auditing, and data security.
Weeks 9 through 12: Testing and performance monitoring
By the third month, all compliance systems should be operational. Frequent testing can ensure that no protocols are skipped or shortcutted. Key performance indicators should be established to use during pitching.
The final 30 days
The last sprint before the pitch should be organizing all of this information and getting it ready to present to investors. Many SaaS companies will hire a virtual CFO to help with the financials. Legal professionals should be consulted to ensure compliance. Documents should be organized into the data room and a complete, polished pitch deck should be produced.
The keys to compliance: Preparation, planning, and execution
Compliance can seem very complicated to new SaaS companies that are interested in obtaining outside investment. All policies and regulations must be followed to obtain the trust and money of venture capitalists. In a competitive startup economy, this is non-negotiable.
By designing a compliance maturity framework, moving through the stages of infrastructure development, and following a 90-day plan of execution, SaaS companies can be ready to present their pitch decks and get the funding they need to scale.
This story was produced by Anrok and reviewed and distributed by Stacker.
